Q1 2015 Strategy Report - Volatility Trading Strategies

It goes without saying that everybody likes to have profitable trading months, but for me what’s even more satisfying is not losing ground when my benchmarks and other funds are.  There was definitely some carnage in the volatility space in January with the XIV down nearly 20%.  Our fund however was comfortably on the sidelines in cash waiting for better trades to come, and they did in February and March.  Patience is a valuable virtue in trading.

It definitely looks like market volatility is here to stay for a while as we are going to have headline risk throughout the rest of the year while the FED bats around the idea of raising interest rates.  It’s one of those things that really shouldn’t make any difference to the overall markets, and if anything to be honest it should be a boost in confidence.  If the FED raises rates, isn’t that a signal that they feel the economy is strong and ready to stand on it’s own?  To me that’s a positive, but something tells me stocks will sell off on the news.  Maybe not into bear territory, but there’s always a chance we see a sell off when it happens.  If we do we’ll be ready.  The inverse VXX hasn’t seen a lot of action within our trading system in the last few years, but at some point in the future it will play a larger role.

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