Here's a little Janet for FOMC day-
Now back to musing and ranting...
Even with two brief days of action, the last month has been a fairly quiet grind after the 17th. About the only thing to do is leg into more short VIX and read the various articles maligning it.
If you have any long VIX or at least anti-short VIX friends, maybe you can forward this to get their input or to reconcile their ideas-
1. As I see it, short VIX is long equities, long AMERICA.
ie. VIX is uncorrelated with SPY ~80% of the time. To all the articles against 'vol tourists' as well as big funds and the feedback loop of short VIX, they fail to note (or really contemplate) the structural interaction with S&P options, thus S&Ps. If you think short VIX is going to blow up (VIX will spike), then you are just writing an article that equities will correct! On some level this is the standard financial news level of garbage writing two articles per day instead of one, getting the 'short VIX risk' article as a freebie on top of the 'markets are at a top' article.
2. Given that, yes we know equities will correct and VIX will spike! Short VIX doesn't mean being all in on short at the money VIX calls, it is a macro outlook/ core position that can be reflected in many kinds of trades with different risk parameters. Given the option pricing most of these trades are just leveraged equivalents of long equities, with a directional decay component that S&Ps can't replicate.
Boglehead indexing investors don't buy all in out of the money SPY calls, and short VIX traders don't use all their capital on the absolute max risk trades. Is this complicated to CNBC idiots?
3. Back to my first point of long AMERICA, short fear- these anti-short VIX people should have simultaneous articles against their fundamentals guru Warren Buffett, who spells out the long equities position of betting on American ingenuity, yada yada. I'm not as big on Warren but most of these idiots are, and his 'bet on America' ideology equals short VIX! Furthermore you have to be betting against America (not just in the S&P corporation sense)- we have 300bil/ month from central banks pumping into our markets, we can create any money we want, and have a bigger military than the planet if anyone has issues with that structure.. hello?!?
4. One last point- one of the 1st things I internalized early in my financial journey was from Tastytrade- In a liquid two sided market, if you think something is stupid, take the other side! I'm waiting for these anti-short VIX idiots to post a long VIX trade. I know this is mostly yelling at the wind as .001% of finance writers have any stake in the game (and they note that as an admirable trait) but its just some ammo in the back of my head. If you think short VIX is so catastrophic, then where is your huge long VIX trade that you are losing on daily?
Somewhere between musing and ranting, oh well. I'll go back to waiting for some VIX spike to pile more into.