Q1 2013 XIV / VXX Trading Results

by | Apr 4, 2013

Q1 2013 Return

Regardless of the many differences between all the tradable funds within the financial industry, they all have one thing in common.  They all had a first day where they began live trading.  That of course doesn’t imply the managers experience began on that day because it takes years of prior experience, countless hours crunching data and system building, and usually a fair amount of bumps and bruises along the way in our private trading accounts to finally reach the point where a fund is ready to be launched to the public.  Here at Volatility Trading Strategies that day came three months ago and we’re off to a great start.

Now as I’ve discussed in past articles, my strategies have all been trading for quite some time now in private.  That includes both within my own account and also private accounts through my other business.  I call that one Prosperitas.  So when I say we’ve officially launched, I’m referring to the long-awaited launch of the subscription service.  Thank you all for your patience in waiting for me to get everything organized here, I really appreciate the support over the years.  I think this new public subscription is going to provide some additional flexibility for all of you to select the strategies you’d like to follow, or perhaps not trade any that you don’t feel are suitable for your long-term goals.  Of course, the flagship VIX Options Strategy has been the backbone of our portfolio for a few years now, but it’s just too complicated, trades too actively, and would not be suitable for a general audience so that will remain private.  I won’t say never, but for now, our options strategies will remain on the Prosperitas side of things.  But from today forward, I invite you to design your own portfolio allocation to match your risk tolerance.  I’m not a registered advisor so I can’t legally provide any allocation recommendations, but speaking in general, I would say the more strategies you diversify into, the safer you would be so consider the benefits of a broad allocation.

Trading volatility as an asset class is a fairly new concept, but there are some funds out there I know of and respect that have been trading live for up to a year now.  I invite people to check out the good work of some of my competitors such as Vix and More and Market Sci.  Like many fund categories in this business though, being first to launch doesn’t necessarily mean the best as I will strive to prove as the years go by.  There are some things those traders are doing that I agree with as they are uniform principles that govern all volatility trading, but there’s also a healthy amount of new concepts I’m bringing to the table which my strategies are based on.

One of the big ones that I’ve talked about is the fact that it’s not about when to take a trade, it’s about when NOT to.  Roughly 50% of the signals that all of our funds are looking at are strong signals that clearly point to a favorable direction.  It’s really what to do with the other 50% of the more ambiguous signals that in the long run will separate the winners from the losers.  My Tactical Volatility strategy spends about 50% of the time in cash which helps avoid the major market drawdowns we are sure to experience in the coming years as we move further into this FED induced recovery.

Now that the strategies are available publicly, these quarterly reports will be a recurring addition here at Volatility Trading Strategies and I invite everybody to check back often for new content.  I will focus almost entirely on the Volatility side of things, hence the name I’ve chosen.  Please join us in this new frontier of trading volatility as an asset class.

  • Trades 1 – 26 are a combination of signals that only private clients were privy to, as well as simulated data before early 2012 using the exact same entry and exit rules as the strategy that we’ll trade going forward.  This is so that we can show returns going back all the way to the launch of the XIV in December 2010.  Starting today going forward, all daily trade signals will be accounted for using market closing prices.  Feel free to execute your trades any time of day, but just know that for consistency in data and ease of accounting, I do use market on close for a large majority of my investing.

Q1 2013


  • Quarterly trade profit is measured off closing prices from start to finish of the official quarter, where as final trade profit is calculated from open to close of the individual trades.  Since trades often times remain open from one quarter to the next, small discrepancies between the two exist.

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