New Intraday Volatility Trading Strategies
Despite having a strong 2016 with our swing trading strategy, Roll-Yield + VRP, many people asked if we could offer a way to hedge overnight risk and/or large spikes in volatility. After much research, we’ve delivered in a big way. We’re now trading three new intraday strategies (in addition to Roll-Yield + VRP), that largely eliminate black swan type event risk.
Systematic intraday trading strategy that only trades XIV and Cash. Will often (but not always) use leverage – so allocations can be over 100% on an intraday basis. Goal is to achieve a higher Gain / Loss Ratio than an XIV Buy and Hold approach.
Systematic intraday trading strategy that trades XIV and VXX. Will often (but not always) use leverage – so allocations can be over 100% on an intraday basis. Goal is to achieve a higher Gain / Loss Ratio than an XIV Buy and Hold approach.
Systemactic intraday trading strategy that trades XIV and VXX. Does not use leverage – so allocations will never be over 100%. Goal is to achieve a higher Gain / Loss Ratio than an S&P 500 Buy and Hold approach.
Key Characteristics of Our New Strategies
1) No Overnight Positions
Eliminates arguably the biggest risk many other volatility strategies face – large overnight gaps in price due to unexpected news or events (think Brexit, 9/11, etc.). Also allows us to quickly adapt to changes in the VIX term structure.
2) Utilize Intraday Stop-Losses
Prevents uncontrolled losses due to unexpected news or events during the day (think Flash Crash, etc.)
3) Strategically Alter Allocations to Manage Drawdowns
The best time to start/add capital to our strategies is actually during drawdowns (effectively ‘buying low, selling high‘). We have a built in, methodical approach to alter our allocations to reduce drawdowns while they’re happening, and then recover from them quicker than if we had static allocations.
4) Execute Trades using Market-on-Open and Market-on-Close orders
Eliminates the need to watch the market tick-for-tick (allowing you to easily follow our strategies even with a full-time job), simplifies our process, and ensures everyone receives the same price.
5) Only Take Long Positions in Volatility ETNs, and Only One Trade per Day
We only take long positions in the volatility ETN’s XIV and VXX, and only make one trade per day. This further simplifies our process.
Note: While our new strategies take positions on an intraday basis, they’re still meant to be long-term strategies that seek to capture the risk premiums in the VIX term structure over a long period of time.
If you’d like to follow along, take advantage of our 7-Day Free Trial.