If you trade and have any sense, you keep an eye on the volatility indexes. As of lately they have been taken out back and shot, or more apropriately, they have been given a long, slow, and painful death over the past few months. At new lows for the year, the VXX is in the low nineteens. My point is not to bring up the obvious, rather to suggest with no bottom in the VXX, buying to hedge your portfolio is moronic.
We all know the saying, don’t try to catch a failing knife, and it seems that may pertain to this crazy ETF. Many people on CNBC and around the net have suggested hedging with the VXX. This has failed miserably for everyone who has partaken over the past few months. Those experts have suggested doing it around $25 on the VXX, the VXX now trades at $19, a 25% loss on your hedge isn’t such a good idea. Ask around to those that didn’t believe in the rally and bought the VXX to try to outsmart the trend. They are now screwed, royally. When the waters are a little more choppy, in the coming months, would be a more appropriate time to buy the VXX. Currently though, it is one horse race and the VXX wasn’t invited. There are still headwinds in the U.S. and abroad, but until the markets start taking those into account, the VXX will be taken out back and laid to waste on a daily basis.