Very unlikely to go to zero with the 50 strike VIX call options as a hedge. But you could certainly lose a year’s worth of dividend in short order if the VIX spikes up.
I own over 70,000 shares of SVOL, Shorting Third month VIX is optimal in my opinion. I would increase weight to 25% and buy VIX 40 calls for more hedging power.
Wow, impressive 70K shares. Even with SVOL long position ( albeit < 0.45%) in the 50 & 60 strikes, do you feel comfortable? I couldn't fully understand the explanation how they are hedged and the fund prospectus has me freaked out with statements like. "you could lose all your money in one day" ??
@nickr.9358 SVOL is now primarily long December VIX calls and short January VIX futures.This is a good combination of a tail risk hedge with smooth income. Also, now, with 10% AGGH, this is producing covered call bond income. AGGH is somewhat anti-correlated to short VIX futures and will produce income even during VIX backwardation when short VIX futures is not producing income. The result is a strategy that has lower volatility and higher returns than SPX. If you want additional tail risk hedging, consider using a portion of the monthly SVOL distribution to purchase UVXY calls. This will potentially put you in a position that will be very profitable in a market crash.
Thanks for the review, I always enjoy your most detailed reviews of your ETFs. I have a question, why do you keep short treasury bonds on your balance sheet and not long ones, because the short bond rate is expected to go down in the near future. Because of the high volatility of long bonds, you don't welcome them?
I was a little concerned about the declining. share price in its first year but seems like it has normalized the last year. Worth a small position given the yield. Thanks for the great video!
22:36 SVOL is now giving dividends in the form of RETURN OF CAPITAL. What is the disadvantages and advantages of doing this? Are we doing this so that NAV goes down? And when NAV goes down, your yield goes up and much attractive to new investors. Is it okay to give away capital on a monthly basis? What is the level of NAV of SVOL where you will stop returning capital as dividend?
Thank you so much for posting this. I was unable to make it on the day, and am so happy you posted it. Great deep dive that only boosts my confidence in this ETF, both for when the VIX is low and when it spikes! Keep up the good work!
you cant be in it for long term; one day it will blow up when volatility is very high, which it will; just extract the premium, reinvest into tother securities and over long term reduce the exposure
Would’ve been good to get into this in January- yet could see a spike in volatility (entry point depending how u look at it) w bank earnings or FOMC this month
Investing is easy in hindsight. Remember, in January consensus was we were heading into recession. You don’t want to be short volatility heading into recession.
The audio setup is not optimum. He should speak closer to the microphone. Being in that room is like an echo chamber. Plus the accent does not help either. Next time, speak directly closer to the microphone. Our IT tech support team is from India. We have no problem with the communication because they have their own mike headset.
How was the nav not discussed? People want to know if the nav will go to zero.
Very unlikely to go to zero with the 50 strike VIX call options as a hedge. But you could certainly lose a year’s worth of dividend in short order if the VIX spikes up.
@@42dunbar
Even "if the VIX spikes up" it NEVER stays there (always goes back down). Long term average of VIX is 14 .
@@42dunbar
But if you have dividend Re invest, you’ll eventually get it back and thensome..
I own over 70,000 shares of SVOL, Shorting Third month VIX is optimal in my opinion. I would increase weight to 25% and buy VIX 40 calls for more hedging power.
Wow, impressive 70K shares. Even with SVOL long position ( albeit < 0.45%) in the 50 & 60 strikes, do you feel comfortable? I couldn't fully understand the explanation how they are hedged and the fund prospectus has me freaked out with statements like. "you could lose all your money in one day" ??
@nickr.9358 SVOL is now primarily long December VIX calls and short January VIX futures.This is a good combination of a tail risk hedge with smooth income. Also, now, with 10% AGGH, this is producing covered call bond income. AGGH is somewhat anti-correlated to short VIX futures and will produce income even during VIX backwardation when short VIX futures is not producing income. The result is a strategy that has lower volatility and higher returns than SPX. If you want additional tail risk hedging, consider using a portion of the monthly SVOL distribution to purchase UVXY calls. This will potentially put you in a position that will be very profitable in a market crash.
Thanks for the review, I always enjoy your most detailed reviews of your ETFs.
I have a question, why do you keep short treasury bonds on your balance sheet and not long ones, because the short bond rate is expected to go down in the near future. Because of the high volatility of long bonds, you don't welcome them?
ZIVB does essentially the same thing (short 4th, 5th, 6th and 7th months), it's +50%YTD.
Excellent explanation of strategy that I hadn't fully understood
I was a little concerned about the declining. share price in its first year but seems like it has normalized the last year. Worth a small position given the yield. Thanks for the great video!
22:36 SVOL is now giving dividends in the form of RETURN OF CAPITAL. What is the disadvantages and advantages of doing this? Are we doing this so that NAV goes down? And when NAV goes down, your yield goes up and much attractive to new investors. Is it okay to give away capital on a monthly basis? What is the level of NAV of SVOL where you will stop returning capital as dividend?
If the AUM keeps increasing, then it isn't an issue
This video is wonderful, thank you.
Thank you so much for posting this. I was unable to make it on the day, and am so happy you posted it. Great deep dive that only boosts my confidence in this ETF, both for when the VIX is low and when it spikes! Keep up the good work!
Just purchase $1000 of svol to day . In it for the long term
you cant be in it for long term; one day it will blow up when volatility is very high, which it will; just extract the premium, reinvest into tother securities and over long term reduce the exposure
So basically this is a short volatility instrument?
Yes
There are 3 other short vol 'instruments', one of which is ZIVB (+50% YTD)
Gentlemen, thanks for posting this.
New follower. Thank you for this video.
You should have closed captions on the screen when this guy speaks. I can barely understand him.
Would’ve been good to get into this in January- yet could see a spike in volatility (entry point depending how u look at it) w bank earnings or FOMC this month
Investing is easy in hindsight. Remember, in January consensus was we were heading into recession. You don’t want to be short volatility heading into recession.
Thank you. New sub.
Very interesting. Wish I could understand every word the "expert" says. No problem that he has an accent. But he should speak SLOWER. Oh well.
Turned on caption would help for me
I agree as I had a hard time as well, but UA-cam has the playback speed function. Click on the gear icon and select 3/4 or 1/2 playback speed.
hard to understand this guy, this stuff is hard enough to understand with good english.
watch with closed caption on makes it much easier.
We are always here to chat. Please visit simplify.us or email info@simplify.us. Thank you.
Hey it's fine that he has an accent. But he should adjust by intentionally slowing it down because it's an obvious problem. Face reality.
@ozzy5146 just put your audio at .75% speed.
The audio setup is not optimum. He should speak closer to the microphone.
Being in that room is like an echo chamber. Plus the accent does not help either.
Next time, speak directly closer to the microphone.
Our IT tech support team is from India. We have no problem with the communication because they have their own mike headset.