A.I.M. Users Bulletin Board

[ls7550]

Has anyone tried AIMing XIV? This ETN seems to have some very good volatility with a long term upward bias from the charts I've seen.

XIV has limited history Ray, during which its trended higher. During other somewhat prolonged periods it would have been generally trending (sharply) lower.

Ideally you'd AIM XIV (short volatility) after volatility had spiked and subsequently progressively saw volatility declining, and VXX (long volatility) when volatility was relatively low, but could spike sharply upwards (typically because stocks had suddenly dropped a lot).

A variation of that would be to AIM XIV (which has more linear type motions compared to VXX's log type motions), and use VXX as AIM's 'cash'. That would have you tending to buy XIV (sell VXX) as volatility had spiked, and then progressively sell XIV (buy VXX) as volatility declined. That might have AIM out of cash (VXX) and out of stocks (XIV) near/at appropriate times (bearing in mind that classic AIM never exhausts stock to potentially sell, but can exhaust cash reserves).

Whilst AIM'ing just XIV over that period would have been more productive than AIM'ing XIV with VXX as AIM's cash, over other periods when XIV was losing, VXX was winning you'd also likely churn out a profit whilst AIM of XIV alone might be losing.

AIM of volatility is something I looked quite deeply at some time back. The options were limited back then and I toyed around with using Traded Options Vega positions in the absence of funds. That looked potentially promising but risky. When volatility funds came on line I noticed that the daily volatility funds didn't track volatility that closely and put the concept to one side with a view to revisit once the available funds had built up more history of actual performance. I'd like to see how XIV (and VXX) run after a sizeable increase in volatility (i.e. the next bear perhaps) before reviewing and committing.

AIM of XIV with VXX as AIM cash could still endure sizeable declines (drawdowns) of 70% or more and as such I'd be tempted to AIM that AIM to further pick off some of that volatility.

Whether that might all work out similar to having just AIM'd stocks ??? - I suspect that could be the case.

Regards.

Clive.