In my last post about volatility products (investing in volatility) (http://bit.ly/1PL3DzY) as booster for your investment account, I briefly mentioned that I was invested in the inverse volatility product SVXY. Personally I had the expectation that after a short correction in an upward movement the bear market would proceed further with a sharper down movement.
But again what is really important here, plan the trade and trade the plan, also only trade what you see and not what you think, listen to the facts.
As you can see in the below chart of the SVXY since mid-February this ETN had a price increase of >70%. In my last article the price was at a level of 47,4USD, as the last peak was about 51,6USD this makes an increase of ~9%.
Of course nobody can pick the bottom but a nice profit could be generated in any way.
The current situation makes an entry not so easy, especially as we cannot rely on chart formations when analysing volatility products. If you are already invested in the ETN SVXY then I would suggest to set your stops according to the Dow Theory. (This would be around a price level of ~44.2USD)
The best way to enter in a new investment position of a volatility product is to wait for a spike in the VIX index and a movement of the VIX future curve from the current Contango situation into Backwardation again.
If you have doubts about the topic investing in volatility or need additional info’s just leave a comment. Of course I will inform you guys as soon as I see an entry again in a similar investing.