Seth Golden on VIX Trading: Profits & Pitfalls // Shorting UVXY TVIX VXX XIV SVXY


Seth Golden on VIX Trading: Profits & Pitfalls // Shorting UVXY TVIX VXX XIV SVXY short volatility trading strategies strategy stocks selling system contango derivatives options futures index david moadel welcome to looking at the markets with
David Modell hey we’re back again with mr. Seth golden from the golden capital
portfolio and phenom group.com which is in progress but is to be released very
soon and mr. Seth gold in case you don’t know already which you should by now he
is a prolific article writer he is frequently featured with articles on
talk markets calm Seeking Alpha Calm look for Seth golden on those he’s also
a prolific tweeter you’ll see him on Twitter his handle is at Seth CL as well
as on stock twits stock twits calm the message board for a finance his handle
their on stocked wits is at Seth Marcus so welcome back to looking at the
markets mr. Seth golden thank you David it’s been a you know this week got off
to a bang so you know I think everybody’s in a good mood coming into
this you know this this week and you know let’s talk some volatility I love
to talk about volatility especially with you since your returns your profits that
you’ve made over the last I don’t know six years or so have been phenomenal
with shorting VIX et PS and just a little bit of background if I may on
what that is mr. Seth golden has well since you don’t like to brag for
yourself all brag for you you’ve pretty much been doubling your account size
year after year for about five or six years now and it’s not entirely but
mainly due to the fact that you like to short
Vic’s exchange exchange traded products and we’re going to call them et PS for
short that includes ETFs and et NS alright so for example you VX Y T VIX
VXX things like that you like to short them
when they go up a lot alright and so there’s a method to your madness and
I’ve had so many people asking and I’m sure you get a lot of emails every day
since you’ve been featured in the New York Times as the guy you’re the go-to
guy for this this methodology okay whether you wanted that title or not
you’re the guy okay so there you go all right
so and actually you wrote an article and I’ve tweeted it and I’m going to keep
tweeting it it’s about the Vics short Vic’s ETP trade and your article that
you wrote had a very cautious tone to it very different from previous articles
that you’ve written why so cautious all of a sudden yeah so
just a quick thing on that article it was released on Sunday and as of today
it has become one of my most popular articles that I’ve written in the last
six years oddly enough and maybe it is because of
the tone you know that I struck in the article which you know differed you know
from like you said from earlier this year or in previous years but I you know
I kind of I wrote that article as a litmus test if you will you know or you
know looking at the market where we are in the market and how popular this this
trade has become and I often get asked the question you know is it an
overcrowded trade if there’s too many people in it you know it’ll tip the boat
the other way and you know all those different types of characterizations but
you know the main reason why the tone was somewhat cautious is because I see a
lot of you know new entrants to the markets to the equity markets and you
know this is their first exposure you know this is the time this is the
instrument this is the the complex if you will and the derivatives they’re
choosing to participate with as their first entry into the market and to me
that’s a little frightening you know you want to have a moron you you want to get
I mean you don’t want that your first entrance into the market to be the
absolute most volatile you know instruments that you can deal with it
doesn’t you know that end game that can’t have a good end game you know
because we’re talking about VIX exchange-traded products here and we
could wake up tomorrow morning there are 10% 20% 30% it can I mean that’s not
figurative we speak it’s literally that can happen and for for you know new
people into the market to experience something like that they’ll be out of
the market very quickly and maybe never come back so you know that was one of
the reasons that I wrote the article and and I struck that tone
another reason is where we are in the in the bull market cycle and where we are
in the fiscal year and in the in the calendar year we just you know tipped
2600 on the SP today you know to say that the markets not overextended and at
the same time volatility hasn’t been at all time you know low levels for an over
extended period of time would be disingenuous I mean these we’re
definitely overextended in the market we’re definitely overextended in
complacency or very low VIX levels and it’s just you know it’s prudent it’s
prudent to be cautious with those two you know characterizations it’s just
prudent and then thirdly is you know I see a lot of people trying you know
different strategies and you know they’re not you know in this particular
market where you know we are in the leader innings of a bull market cycle
and we are really little levels on the VIX you need you can’t just be
wishy-washy and trying this you know one day with the VIX and trying this
strategy you really have to you know if you
to him back and forth and testing different things you really should just
pick one thing and test that out over a longer period of time give it its due
appreciation you know rather than employing all these different faculties
to try and find the one that works I just don’t think that’s going to pan out
very well so you know those are the three reasons why the article kind of
comes across that way you know rather cautious I just think there’s a lot of
opportunity after this year where by the dip was I mean the market goes down a
half percent it goes up two percent in the next three days I doubt very much in
2018 it’s gonna look like 2017 and that’s not to say I think it’s going to
be a bad market or we’re going into a bear market or anything like that but
you know to say it’s gonna mirror this year you know you’re risking a lot
you’re risking a lot so you know why go out on that limb why not you know take
some caution maybe you know curtail prepositions take profits I mean come on
you know we we’ve got these ET peas at you know record low prices today they
all hit either you know the ones that decay in value I had hit record low
prices and the ones that appreciate in value hit rec you know near record high
prices so just prudent prudent planning never
hurt anybody gotcha yeah and you’re the ones that
you’re referring to the ones that hit record high prices are close to it would
include XIV s vxy things like that reverse reverse of inverse sorry VIX et
PS okay which is one way that some people indirectly short the VIX
Volatility yeah yeah all right now the and by the way I’m going to put
a link in the description of this video so look for that to your talk market
talk markets.com article where you caution people who are maybe over overly
enthusiastic or new to the short vics product trade
and I’m so glad you put that article out because I’m so glad we’re putting this
video out with a cautionary tone because it’s so easy to get sucked into this and
think oh this is easy because yes in 2017 it has been easy
every time the VIX pops even for a day you short it and it goes right back down
the next day or the day after that yeah rewards have been so so fast coming on
on volatility spikes you know I’ve been doing this for six years now and they’ve
never it’s never been you know the environment were in 2017 has not been
duplicated in history you know in the last six years yeah so the impression
that I got from your article also is that you feel that the people who have
just started this trade which includes me by the way I just started doing this
on a serious basis a few months ago have not really been tested for an example in
August if you were doing this trade this type of trade in August of 2015 you know
what it’s like to be tested but if you just started in 2017 you really don’t
know what it’s like to be tested can you take us back to what happened in August
of 2015 I believe it was and how did you get through that psychologically and in
terms of liquidity yeah so there was a lot of rhetoric and and you know
hyperbole surrounding you know the possibility or the probability of a
China Chinese economy hard landing coupled with some issues in the credit
markets that you know we’re spooking people and you know before I knew it I
had already started you know employing my strategy which is you know as the VIX
starts to elevate or spike I start layering in short positions I didn’t I
didn’t foresee the China you know the rhetoric on TV about the Chinese hard
landing being all that probable so I went about my
you know my business if you will and before before I knew it
you know you vxy in particular was up a hundred percent within a week maybe six
trading days which is fine I had enough liquidity I at all times I have about
two hundred percent liquidity so 100 percent is not comfortable but it’s you
know it’s just normal business if you will if you’re gonna be in a VIX trader
because it’s happened several times before that so you know I put on my next
layer and now we’re up the you know the UV XY is up about 140 percent and the
market is down I think at that time about six percent and you know I’m
thinking this is overdone you know I put on another layer it goes up another
about you know fifteen percent on me and I’m thinking alright
you know we got a problem here my liquidity levels are fairly low at this
point I’m running you know twenty percent liquidity left maybe and you
know it’s it’s you know that’s when it starts to get you know kind of lifestyle
changing you’re thinking about you know I I don’t need a new car you know the
appliances are gonna be put on hold honey you know maybe don’t go and do
your nails this week you just you know these things and you don’t sleep you
know you don’t sleep you’re up on your phone watching the futures you know
seeing what the you know market might look like in the morning and you’re up
at you know 3:00 4:00 a.m. you know when when you’re up opens because that may be
you know a tail on what our market will do right so it’s just it’s an extremely
uncomfortable position to be in and surely enough these just kept running at
its peak you vxy was up 200 and I think two fifty two two seven two hundred and
seventy percent Wow yeah I you know I taken some positions down which means I
took some losses into that to shore up liquidity that would kind of a measure
you know I would take just enough off that if it would jump another 40 percent
30 40 percent I’m still in the game and I can actually still add right that was
a game I was playing at that time just to make sure I was still in it because I
didn’t believe in the China hard landing you know we needed a correction NER I
should say a pullback in the market so you know I measure it out for 10 percent
on on the sp500 against a VIX correlation you know I kind of figured
where you know we would be on you V X Y and T VIX and and VXX at the time and I
you know I was able to you know put on a few layers near the top of these of
these cycle you know you vxy I think hit a high of 95 and change from 30 from the
$30 Wow it almost 95 or just above 95 and I
was able to get it you know a few shares I mean really small I’m used to layering
in the Falcons you know in the thousands on share lots and you know I was always
down to you know sixty a hundred hundred and fifty share lots just to get
exposure because I know this has got to come down soon enough and that’s you
know one of one of the things about the VIX you know for those who don’t know or
getting involved the VIX just doesn’t have the ability to stay elevated or on
an upward trajectory for more you know more than a few weeks at a time and at
best a few months at a time well yeah worst case scenario for the
market yeah at best the volatility up for a few months at a time
you know akin to 2008 I think it was four months or so that the you know
before the VIX hit its peak right um so yeah it was an extremely uncomfortable
period but I didn’t fumble you know I didn’t try different things I really you
know I stuck to my discipline you know to the extent that I had an
experience that type of move in the vixy TPS before you know I still stuck with
the discipline and you know made sure that I could still participate even if
it meant I took a little bit of losses on that way up so that eventually I
could just you know layer higher and ride it all the way back down and I
wrote it you know all the way back town you know to the point where each
position when you know was was generating a twenty thirty percent
profit I had 66 percent exposure you know at
that time you know that the peak of the spike you know I you know I I just
overexposed because you know that that’s just my strategy if it’s gonna be that
meaningful of a spike my normal core is 20%
you know VIX exchange-traded products that’s my exposure 20% of my capital but
you know a meaningful spike like that which gets overextended in time and in
in in in value a dollar value you know it’s got to come back down you know the
economy was good at that time the US economy had no real issues you know
corporate earnings were you know growing if you subtract out the issues that we
were having with the oil patch we were fine so it really was you know just an
exotic you know it was just a lot of fear and
66% I think I mean I ran about 40-plus percent into March of 2016
March of 2016 okay did phenomenally well yeah but again terribly uncomfortable I
don’t wish that upon anybody and you know it’s something that you have to
accept if if this is what you’re going to do as a trader if this is going to be
your core strategy for beating the market every year you have to expect
something like that and be prepared surround yourself with people that have
been through that type of event and kind of level such you know your
expectations or your psychology because alone you can you know do some damage to
yourself yeah the number one thing that people do is
you they get out at the wrong time and they get in at you know the wrong time
so yeah or they get a margin call from their broker and they will do it at the
worst possible time and they will liquidate your position at the worst
possible price not even a limit order just a market
order and they don’t have to notify you either right now all of a sudden you go
to your brokerage statement or balance and you’ve been liquidated yep and your
account is suffering quite a bit because of it and they don’t care because
they’re not concerned see they’re not concerned with the fact that the VIX
always comes back down and these VIX products always deteriorate and if you
just stick it out you’ll probably be alright they don’t care about all that
stuff they care about their risk talking about the brokers now and so they will
liquidate your position just because they don’t want to take on the kind of
risk that they think you’re taking on yeah if yeah if your position size is
too big and so the impression that I’m getting for people who want to get or or
have just started like me getting involved in the short volatility product
you know trade is first of all have plenty of liquidity plenty okay which is
what Seth golden does you talked about discipline I think that’s a big part of
it also be prepared for these kinds of events you know it happened in August of
2015 and that was only a 6% drawdown in the S&P 500 we’re not talking about 2008
here folks we’re talking about just a minor pullback and the VIX popped what
200 plus percent something like that okay some of these VIX products so you
know there’s a message to be had here small position sizes keep plenty of cash
in your account or liquidity and also have a support system of some sort which
I believe tell me if I’m right phenom group calm is going to be part of that
support estimate am I right in saying that yeah absolutely
phenom group comm we plan on watching in December I actually tweeted yesterday or
the day before a screenshot of what the site homepage is gonna look like yeah a
lot of people like it’s still under construction we’re still doing some
tweaks here and there and coding and logic but yes you know it’s gonna be
very Vic centric you know it’s it’s you know centers on my strategies you know
being you know in the volatility complex as well as the CPG and retail categories
but you know we plan on having a lot of you know people experienced folks that
have you know been in this trade for some time yeah you know so we have chat
forums and talk to individuals and obviously you know subscription to the
site you have my time you know you’re welcome you know to email me at your
leisure you know we can discuss and walk through any of you know the trade risks
risk valuations and things of that nature you know I’ll definitely be there
walking people guiding people through you know what what is an optimal you
know position strategy at any given time it’s not often you get that kind of
access to a world-class investor or trader and so this is a rare opportunity
I believe there’s the only a limited number of positions available right now
for the Phenom yeah oh come Premium Subscription am i right correct yeah
well we we were only gonna launch you know to an exclusive audience of 1000
subscribers okay the the the response has been phenomenal huh yeah you know we
have about a hundred hundred and twenty-five I think left now okay um
it’s at a discounted rate because you know once we you know go to a broader
public next year we’ll reopen the subscription service but it’ll be the
regular you know price it won’t be the discount price for this launch period
Center makes sense okay so people can contact Seth golden by email I’ll put
the email address up there on the screen and you can look below the fun on the
description of this video for it is Seth dot golden at cooling
sitcom and that’s right on your screen right there and also just go swing by
WWF phenom group comm check it out it’s not fully open yet but you know put
in your bookmarks and get in while there’s a discount and and while you can
because you may not be able to get that kind of deal forever so you know I think
it’s really great what you’re doing in addition to tweeting on almost a daily
basis pretty much a daily basis some of your trades before you make them not
just after anybody could say after the fact oh yeah I died I made a ton of
money on that trade you’re you know you’re letting people know what kinds of
trades you’re making and that’s at Seth CL on Twitter check that out and S at
Seth Marcus on stock twits comm now I had a personal question since I’m
starting my journey I have a tendency to my approach and you talked about today
about how you should probably choose an approach that’s right for you and kind
of stick with that don’t don’t try something you know go here and then try
that and you know just testing things out randomly so for me since I love to
sell options and watch them decay and deteriorate and so I’ve been selling
weekly the week leaves the weekly calls on you vxy every time it pops okay so
then you get decay because it’s theta decay for option sellers right you get
decay on top of decay so I that’s that’s my style doesn’t mean it has to be yours
or anybody else’s so and I’ve been following your trades on Twitter and
I’ve noticed that whenever let’s say the SM you wake up in the morning and the
sp500 is down let’s say half a percent it’s down moderately point forty percent
point fifty percent if if the conditions are right you’re probably going to short
some you vxy or TV IX or VXX asserting a you know assuming that the
VIX term structure is sloping upwards like it should assuming that it’s not a
nuclear war type situation or September 11th type situation assuming that
contango and role yield are decent all right assuming those parameters are in
place I’ve seen you pretty consistently short you vxy
something like that on you know small market drawdowns
but what if and I haven’t seen this yet in 2017 what if you and I wake up well
you wake up a lot earlier than I do what if we wake up and the ESPYs are
down one and a half percent or two percent on a day like that are you
likely to short a Vicks product or are you more likely to just stay out of it
because this might be the beginning of a market correction yeah it’s a lot of
questions there and imperfectly so yeah I’m looking at all those things that you
mentioned so great terminology contango I want to see what contango is or are we
in backwardation you know if we’re in backwardation then you know that right
away I’m probably going to wait yeah I’ll have my limit orders in don’t get
me wrong I always have my limit orders in in the pre-market
or limit orders on the day and I always set them really high so that a the
inventories there for me during the day that I can modify it you know if I just
bring the price down if I do desire to get an execution so I’ve always got my
limit orders there so I’m looking at content mm-hmm contango
you know I’m looking at where we are and then the you know economic cycle you
know our corporate earnings good corporate earnings are good that’s my
foundation that’s my foundation for the book for the market you know if that’s
good I’m okay I’m looking I also want to check you know what the bond markets
doing you know the equity markets one thing bond markets a totally different
beast if there’s nothing funky going on funky is that yes if there’s nothing
funky going on in the bond market then I’m okay you know as well so yeah if
we’re down half percent 1% even 2% so we can go back to 2016 where that actually
did happen well I think we opened up on brexit the brexit vote in 2016 and I
wrote an article about that I head of the brexit vote like a day or
two before I think it’s called strategy of my strategy for brexit it’s on
seeking alpha calm okay and I was basically telling people in this article
that the the UK economy is not big enough to hurt the US or the global
economy it’s just not so while it may you know cause some you know disruption
in the near term for the European Union and things like that it’s really just
not big enough to take down global markets let alone the US market but I
think we opened up a full percent maybe a Moana for a point and a half down that
day and I remember specifically on the Dow we finished the first day after
brexit 600 plus points down and I was layering positions into that spike again
kind of like the China hard landing thing I didn’t believe because I you
know as an economist I I’m pretty fundamentally sound on what the you know
what’s being foreshadowed or what’s just hyperbole you know what the reality is
probably going to be so I was layering positions and I had you know I went into
that brexit with you know I think like 18 percent core holding so I had even
more liquidity than usual yeah the second day of brexit the second day
after or the second trading day after the Dow still Dow finished down that day
250 points but you know the VIX couldn’t it just couldn’t keep momentum you know
it had already spikes so hard on the first day after the vote that the second
day it just it wasn’t rallying much it wasn’t rallying much at all and so I
went to even heavier on the second day and I had you know upwards of 37%
exposure after the two days the third day so if you went
into this event okay which a lot of people did and again I wrote my article
saying this is my strategy I’m going to short there was another article that
came out the very next day after a mine was published that said you should go
long so we’re two days out of this event
okay the morning the third trading day in the pre-market I think all my dogs
are coming in their own that’s great they can’t wait to hear what you have to
say now let’s so what happened pre-market on the third trading day it
had taken back you vxy so uvx why it had fallen more than it had gained in that
day and I had that well almost the full two days it had gained in the just the
pre-market so if you didn’t exit your long position
at the end of the second trading day you pretty much were out you may have you
know been flat maybe made a couple bucks but man it just wasn’t worth it now if
you assured it you cleaned up yeah you just cleaned up and then by the fourth
day all that rallying you vxy was completely wiped out and it was at a
lower price than when it went into the brexit trading days so I mean that was
the optimal strategy you know shorting into that knowing that you know this is
just the UK and don’t get me wrong I love the UK but it’s not enough it’s not
enough you know them you know the brexit vote was not enough to take down global
economies especially when global economic conditions were strong really
strong so to answer you know question yeah it depends it very much depends you
know you every event is different ya know two events are alike no two
events are expressed for the same variable you know the causation is
almost never the same you know that that you know makes the VIX spike
so every event is different you have to look at them you know through a narrow
lens got it okay so it’s situation dependent it depends on so many factors
that you cannot definitively say oh if the market if the ESPYs tomorrow morning
are down one and a half or two percent I’m shorting UV x YT VIX VXX
it depends on you know why it’s down so much what are the macroeconomic factors
and so on and so forth in addition to the role yield and contango
situations so on and so forth got it it goes back to you know an earlier
question that you mentioned David you know or what we were talking about
earlier if you’re just coming into the equity markets and this is your your
first exposure is to volatility you’re not really going to have that
fundamental understanding of macroeconomics so you know right it’s
just or it’s hard to it’s hard to right it’s hard to understand how the markets
react to those macro factors right right and hence the need for you know phenom
group.com getting involved you know with a mentor and getting involved with a
community that does discuss all of these factors and has the knowledge base that
you have at you know the golden capital portfolio and phenom group comm so
that’s why this is hugely important don’t go into this alone alright have a
mentor have a group that you can talk with of knowledgeable people who have
made this type of trade over and over and over successfully and people who’ve
been tested yeah people you know you’re not just discussing this with people
who’ve just started doing this all right wanted to get it I’ve got so many
burning questions you have a core position I’m gonna define that for
people we’re talking about you short some UV X Y T VIX vixx u short some of
these products it’s kind of a short and hold like a long term short situation
okay as opposed to your quick you know swing trades and day trades alright and
I believe it’s about what 20% of your of your portfolio is yeah on average okay
and it varies of course now I don’t have a
core position yet because I’ve recently started doing these things I’m waiting
for a market correction before I start my core position would you reckon Amit
what you recommend is somebody who hasn’t started their long term short and
hold you vxy position would you recommend waiting for a market
correction or just just get started accumulating your short position what do
you think it’s 2017 you know this market yeah you know if it
was any other time I’d probably say it’s best to wait look you know optimally you
do want to wait to you know establish your core position when you get a nice
spike that’s the best-case scenario but in 2017 I mean waiting for that would be
painful you’d miss just a ton of opportunity for
da so I’ll put that my parameters there and say in 2017 it’s not a bad decision
to start a small you know very small you know position that you plan to hold long
term you know but yeah optimally it would be great if you could just wait
for a spike you know and and you know take a small position at a you know
elevated uvx whitey VIX price etc but if you do that this year it’s it’s been
foolhardy yeah it’s like that that old the play Waiting for Godot or if you
like movies waiting for Guffman where they just wait and wait and wait for
something to happen and it just doesn’t happen and life is passing you by and
profit by passing you by right so you know maybe at least for me maybe it’s
time to just go ahead and get started on my long tour long term short position
well you know I do that through selling calls maybe it’s selling you know I
don’t know we’ll see well we’ll see how that pans out but okay I’m gonna take
that to heart want to talk about the VX st oh oh getting into upper-level stuff
here this is for those advanced people you’ve been waiting for the tips and
tricks one of seth Golden’s tips is to watch not just the VIX but also
you know not just the 30-day out futures the monthlies but also the VX st which I
believe is a shorter term is why is that nine day out futures and the
relationship between the VX st and the 30 day out VIX futures what why is that
a relationship um important for traders and investors so basically the VX st is
is kind of like the vixx’s little angry brother and nobody has described it
better than a gentleman friend of mine he also participates on stocked wits his
name is Eric he goes by Vic’s Hulk and just you know really intelligent
gentleman and you know very knowledgeable he has a blog site as well
and he’ll be participating with phenom group calm but you know I want to give
you his characterization because it’s really poignant but I’ll start out by
saying if you know the simple definition that the VIX is the expected volatility
over the upcoming 30 days vx st is the equivalent for the upcoming nine days
think of it as volatility with an even shorter time duration or time horizon
than the VIX it’s kind of like zooming in on the next few days it rises faster
than the VIX and it drops faster than the VIX so if you make a habit of you
know keeping those correlations you know keeping them charted you know the on a
chart and a tab on your screen daily you can become used to seeing the movements
and you can actually tell that the breadth of a spike in the VIX is either
at its peak or you know about to roll over because the vxs tea will just all
of a sudden peter out start to die and so you know if you’re shorting vixy TP
you can use that as a signal now realistically you don’t know when you’re
in the moment and you’re watching it you don’t know that it’s petered out you
only kind of know that in hindsight right but that’s why I kind of suggest
you know keeping it on you know keeping that tab open and studying it over an
extended period of time maybe you look maybe you can become prolific at not
just you know looking in hindsight but maybe you can actually identify you know
just through feel you know an experience that this is topping out the vxs T is
topping out and the VIX may soon follow got it okay so it’s not a perfect
indicator there is none by the way case anybody doesn’t know news flash there’s
no perfect indicator there’s no one to one correlations unfortunately in the
mix complex there it’s really hard right but if you’re watching the VX ST maybe
you go on to Vic’s central.com or something like that you know some really
reliable website and you’re watching V the V XS T and you see it you just watch
it and get a feel for how it moves and it can sometimes be a precursor of how
the 30-day VIX futures expectations which is the VIX can behave you can kind
of get a feel for it and so that that’s another tool in your toolbox and so I’m
gonna start watching that more closely and taking it more seriously gotcha okay
and then finally you know the VIX ETP SUV x yv x xt VIX they’ve had a number
of reverse splits over time because they’re so terrible they go down so much
in price that they have to artificially inflate the price through reverse splits
for example you know we’ve got T VIX trading below $9 a share you vxy just
had a recent 52 week low trading price can we expect more reverse splits in the
future you know in the near future and how do we prepare for such an
eventuality yeah so you know i’m expecting t vix that’s I
think the lowest priced one right now at seven right around seven dollars a share
and they typically reverse split that credit suisse reverse splits it around
below well around the two dollar level however last time they reverse splitter
around the four dollar level so you know if we kind of look at the trend I would
say you know they’ll probably do it again at the four dollar level UV X Y
tends to split around the seven eight dollar level so it still has a ways to
go being that today it closed in the fourteen dollar range what happens when
these products decay to the extent that they do and they kind of you know reach
these really really low valuation levels probably on a dollar basis they become
harder to borrow they become that much harder to borrow and then when they
reverse split you you do have more inventory of the of the product but also
one of the things is there’s there’s fees you know if you’re holding these
through a reverse split there there are fees that you accrue in your in your
account they’re not meaningful they’re not terribly meaningful but you know for
someone like me it’s you know few hundred dollars smaller positions you
know less than a thousand chairs and maybe ten bucks I don’t you know
something like that okay but you know it’s there it’s a fee and you can write
that off yeah you know in your taxes these are your fees know them so you
know those are just some things to recognize and but yeah I would be of the
opinion that you know next year were assuming you know status quo in the
markets we should see more reverse splits but I don’t anticipate them this
year we only have a month left would be even when it’s from $7 to $4 that’s
that’s a tough slog even 40 VIX at this point so probably next year and it
doesn’t sound like a major issue it you know if you’re getting into this type of
trade I spend necessarily a lot of time losing
sleep over the upcoming possibility of reverse splits in UV x YT v IX v XX
sounds like there are other things to look at and worry about am i right yes
yes absolutely I’m not sure I think I’m fading oh no I
kind of like the the dark background though it’s kind of its kind of spooky
I like the spooky ambience of this video because it’s cautionary we want to scare
people who think that this is an easy trade it’s not an Aussie trade you got
to have the research which mr. Seth golden is doing he’s done so much he’s
been doing this for a longer than most okay
in fact it sounds like you’ve been doing this practically since some of these
products have been introduced so yeah you know to give some people drop some
names if you will you know Eli Mints Vic’s central.com the antastic resource
yep you know six-figure investments dot-com another advance hard work
fantastic resources right people that follow me and I follow them on Twitter
you know look into the the entire Twitter you know go to the VIX there’s
some you’ll see who proliferate the are mountain Twitter and you’ll be able to
gauge for yourself you know who are the right people you know who has the
followers and who is dedicated to tweeting and investing in other people
gotcha alright and people need to follow Seth
gold and if they’re not already on Twitter the handle is at Seth CL on
stock twits the handle is at Seth Marcus so what’s on your radar outside of the
whole VIX complex what else is on your mind
yeah I’m focused on you know the geopolitical factors right now I’m
focused on retail heavily on retail right now and cpgs because it’s the
holiday season you know I mean if the retailers can’t do it during the holiday
season they can’t do it right so you know and I’m you know I’ll go I’ll be
going out doing my channel checks at the retailers on Black Friday the day after
you know I’ve been doing that for over a decade now you know and I can tell I can
literally walk into a retail store you know I can I can look at what’s on the
shelf I can look at the traffic I can look at the parking lot and I can pretty
much expand that across the their entire chain so I can go to a target I can go
to a Kohl’s I can go to a Best Buy and I know what to look for hmm if I see what
I like bullish or bearish I know how it’s gonna turn out for them during the
quarter so those are things that are on my radar and I’ve written you know I
mean I warned on Macy’s last you know two years I’ve warned on JC Penney’s
last year and a half I’ve learned on Bed Bath and Beyond for three years and you
know this is the O religion to me if you will so those are my radar you know back
to the geopolitical I think everybody’s you know kind of concerned or focused
you know focused on are we going to get a tax tax reform you know before the end
of the year and we obviously have to vote on that and then there’s the debt
limit ceiling that we have to also address here in December those are two
big things in the month of December that you know the government has to tackle
and you know to me that’s oh that’s problematic I look at it and you know we
saw what happened with health care you know they couldn’t get that they didn’t
believe they had the votes so they pulled the voting process the first time
and then you know they tried and it didn’t pass you know in my mind I’m
thinking we’re in the fourth quarter I don’t think this Senate look the path to
tax reform is a difficult one and it’s very narrow you know there’s there’s the
way the bill stands it’s gonna take a lot of negotiation and it’s gonna take
some give on the Democrat you know the Democratic Party is is you know not
gonna do any favors you know for the Republican Party and vice versa so this
is on the back of the Republican Party and you know they’ve they’ve got a you
know have to give a little to get a little
within their own ranks so it’s a very delicate balance that they have to
strike and that makes that path really narrow so I don’t know that it won’t
take them until 2018 the early part of 2018 to actually do a vote and that may
be optimal because let’s face it if it doesn’t pass this market like probably
likely will pull back you know that’s a disappointment that doesn’t mean that
I’m saying that you know credit tax reform is baked into the the market
right now but it’s a disappointment in and of itself and the market will react
to that you know and if it’s a meaningful reaction it could actually
spill over into the economy look if the market starts going down to 300 points
in consecutive days you know consumers aren’t gonna go out and spend as much as
they did the year before yeah and in the political community
doesn’t want that you know the government doesn’t want that so I just
think it’s safer for them to continue the negotiations and just do the vote
next year you know nobody promised tax reform in 2018 we’ll try to do it we
want to do it that’s the plan but look if we want to get the right plan maybe
it does have to go out into 2018 you know a January February so we wait a
couple more months you know but why risk the economy why risk you know such a
market turmoil during the holidays you know nobody wants that uh nobody wants
to wear that on their lapel you know during the primaries so I think the debt
limit sailing is very important though that’s gonna be you know that’s gonna be
the next thing that the markets start to adjust to you know can these guys get
their act together and come to an agreement and raise the debt ceiling
interesting okay again we’re not mate we’re not in the
business of making predictions here but these are things to look out for and if
you are a vics product trader definitely things to look
for and again to me tell me if I’m wrong the the solution for all of this no
matter what happens in the rest of 2017 early 2018 small position sizing be
aware of your risk I’m you know I was I think I stocked wits
I’m triple digits you know I don’t need to take any more risk you know I doubled
my accounts I managed accounts you know this year I mean the last this week was
huge for for the golden capital portfolio yeah you know I mean the fixed
products just you know fell through the floor yeah so yeah I mean you know here
we are towards the tail end of the year you know if you’ve done really well and
you know most independent traders have in this particular trade the VIX complex
you know why you know why over extend this warranted year you know I have a
great holiday season the market you’re always gonna happen off but that’s the
beauty of the VIX as well the beauty is there will always be another opportunity
yeah there will always be another opportunity it’s nothing wrong with
waiting in fact you make more money waiting than
you do over trading that’s for sure and cash is a position you’ve answered
so many of my questions today I really appreciate it it’s such a rare and
excellent opportunity I hope that the people watching and listening to this
will go to phenom group.com bookmark it and if you want a subscription because
you don’t want to be alone in this type of trade you know the contact Seth gold
and that’s Seth golden at cooling sitcom check them out on Twitter check them on
stock twits talk markets calm articles and seeking alpha calm articles and go
to the description of this video and check out his latest article on VIX
products which covers much of much that we’ve spoken about today and a lot more
so Seth golden it’s always a pleasure to have you here again we plan on making
you a frequent guest here so I you know we’re gonna bring you back hopefully in
a couple weeks and we’ll follow up and see how to see how the political
situation is and and so so mr. Seth : thank you again for coming
on looking at the markets my pleasure thank you David
thank you for watching please like comment and subscribe and I’ll see you
next time

7 thoughts on “Seth Golden on VIX Trading: Profits & Pitfalls // Shorting UVXY TVIX VXX XIV SVXY

  1. Seth looking gangsta with the dogtag necklace… Indeed has been a much better week than last week. It was what 7 up days in a row? People on ST were saying it was a new normal and $UVXY was gonna only go up from there lol….

  2. The takeaway for me from this interview is that Seth has a plan for any contingency when trading the vix….. He has thought ahead of time what he is going to do in the event of different moves. That is key for trading… The most opportunity comes when this makes big moves. As we have seen in the past vol can make big moves to the upside and can stay up a higher levels of days weeks, even months… Many people have not experienced a bear market since there hasn't been one in a few years.. It will happen again at some point. So the key takeaway is always have some dry powder…. This is even more true for me because I sell naked calls so every dollar the etf moves higher the formula for margin dictates that I have more dollars on account to offset my risk.. Being forced to cover at the top is a major risk to be avoided…

  3. Topical I don't sit in gasoline trade for long time; I do my homework / sniper rifle. I try to enter precision timing to max profit. Patience vs market spike will test your mental to the max. I do watch many indicators, news, and future market. I am working on Quant engine to automate this process. By the way; I close out my short VIX=profit$$$$$, and take profit 3X EFT = $$$$$

  4. Got a sm position TVIX @ $7.20. Hope to see spike depending on holiday buying. We'll see. Have to buy this on steep dip so it can be scary to wait for it to pop back up

  5. Thank you David. Seth continues to show his knowledge and confidence in his abilities. I strongly recommend following him.

  6. Let me ask you a very remedial question, because I still don’t understand how these stocks perform. If I buy TVIX at $5.30 and I hold it until it goes to $20.30. If I sell I just made $15.30? Is that how it works, just like a regular stock? Explain it to me as if I am a child!

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