We have talked about VIX/VXX before. As is evident from the chart above, there is a massive short position against the volatility index near its all time lows. Plus, consider this. According to the COT reports……
- Commercial Interests (smart money): 116K Long Vs. 13K Short
- Leveraged Fund & Speculators (dumb money): 43K Long Vs. 176K Short
As I have indicated in my COT Weekend update, commercial interests tend to win. Although, the timing is not always exact.
So, we have a massive “smart money” long position and a massive “dumb money” short position. And at the time when VIX/VXX hitting all time lows.
Something tells me that as soon as this period of low volatility ends, VIX will stage a massive rally to the upside. As much as 100% or more and within a short period of time. And I am not the only one who thinks that. You Can’t Keep the Panic Out of Stocks Forever, VIX Traders Say
So, is this the best trade out there today? Well, that’s for you to decide.
