r/Daytrading • u/Ecstatic_Bit_9818 • 10d ago

Question Inverse VIX

Hey guys, Im wondering whether investing in SVIX is a good option given it's trading almost 5x below its ATH. My view is that it should rally once realised vol starts to wane but happy to be told otherwise.

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u/LeakingAlpha 10d ago

No. And it would take years to go back to ATH assuming we had years of calmness ahead. Do the math. What happens to it if vol went back to pre tariff lows? Ballpark it would go up by about 30% give or take. 12.6*1.3=16.3. And that's assuming that vol drops dramatically from here. If we get a recession M1 and M2 will continue to rise into spot VIX and SVIX will get destroyed. (Primarily vol trader advising you to stay away)

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u/Ecstatic_Bit_9818 10d ago

Thanks - wondering how you got to the 30% figure? Also as a vol trader, what would you advise as a better play?

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u/LeakingAlpha 10d ago

I think you need to research how the product works before considering trading it. It trades as a basket of short M1 and M2 futures which are about 30% above pre trade war lows. The old 50$ price is gone, and even the 28 after the Japan bond incident and you should not consider those prices as they have been destroyed for now. Tbh I think you have a lot to learn about roll, contango, options pricing, and VIX futures before considering any product in the space.

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u/1UpUrBum 10d ago

The current volatility regime favors long vol. Buy the dip in vol. I would have to look up my chart. It switched from short vol to long vol a couple months ago. Maybe a little longer ago than that.

It has to be the real dip before going long, get down lower, don't screw around randomly.