iPath S&P 500 VIX Short-Term Futures ETN (VXX)

[DrContango]

"Because, as stated every time the deadline for a congressional budget debate approaches, the VIX soars. Just going with a fact based trade. You obviously know the " why" , I'm just going with the " what". Could you explain why VXX explodes up as we get into these budget debates?"

VXX explodes UP whenever the VIX futures pop.

And your thesis is correct.

However, you cannot guess when those futures WILL pop, neither with tea leaves, a oiuja board, nor traditional technical analysis.

And while you are waiting, VXX will continue to decay due to contango AND your options will lose value as theta decays.

If you cannot control the urge to swim in this mire, a wiser decision, imo, is to wait and buy calls when the the VIX begins to sizzle. But you must be nimble enough to take quick profits.

After a VIX spike, the V-proxies collapse with great vengeance.

Good luck. I'll try to answer any questions that you might have.


Doc