Disadvantages of Holding Vix for a very very long time?

I am wondering, what are the disadvantages of just leaving X amount in the fix and having enough funds in your account to offset the possible loses and leave the account until it is in the black?

Are there not negatives for this doing this?

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VIX is normally intended to hedge against market volatility. Market Volatility hardly happened for a long-duration of time. But imo there is nothing wrong with holding VIX for a long term in the same way people are holding bond in their portfolio for a long term as long as they are happy with potentially a lower return.


I have plotted VIX vs S&P500 for you to make your own decision to compare between the potential return you would have got in the market and the return you will get by holding the VIX for a long term.

There is a good article from seeking Alpha regarding Short-Term Vs. Long-Term VIX holding for you to make a decision.

I understand you are referring to a CFD position.
By design CFDs aren’t meant to be held for very long ; good practice would actually to never hold them overnight, since the margin fees are prohibitive.

Keep an eye on your fees if that is what you intend to do, and hopefully for you VIX will shoot up like crazy in a couple of months for you to get a nice payout.

Thank you both indeed!

Correct yes, CFD was what I had in mind. I guess overall the thoughts at this point are, should I sell and take a lose of maybe 45% or should I put enough funds in so that when they bounce back, which I am sure they will within the next few months but lets say the next 6 months.

But on the assumption that I could break even I was curious to know if Trading212 charged any fees for holding positions open, excluding the fees initially taken via the margin fees when you first open the position.

Long-Term Holding and paying Overnight / Weekend fees does not make any sense. Your profit will be eaten day by day by the fees.

I am not quite sure whether you are aware of you could still hold the VIX and the likes for a long term such as the iPath Series (e.g VXX, etc) without paying any fees.
But for this you will need to use a different platform.

Oh, I had no idea at all that there were fees inured by holding these positions with Trading212. You wouldn’t happen to have a breakdown of such fees?

CFD is a dangerous game especially if you do not know what you are doing. Hopefully you do not do it with leverage.

Here is explaining the CFD fees

If you want to see how dangerous the CFD is if you do not know what you are doing; this Barbie teacher is summarising it well. Normally people will remember it well when Barbie is explaining it to them.

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Interesting, I thought I knew about CFD’s… But indeed, I did not realise the overnight charge.

Now is to find out the Quantity x Swap Rate (instrument/position) * Number of Nights

Swap rate for the VIX :smiley: I cannot see it in the “info” of the market. So I’ll have a little butchers and see if I can find out.

Ah ok so the forumla is:

Short position overnight interest: 1000 x 0.006269 * 1 day = 6.269 a day
Long position overnight interest: 1000 x 0.002809 * 1 day = 2.809 a day

So I guess for every day I have it open, its costing me $10! Interesting indeed!

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Yup, that’s the margin fees i was referring to, i get how you understood it as the initial margin requirements; those are not a fee, but how much capital you much lock in order to open the position.

Fees come in two flavor: the heightened spread compared to the market bid/ask (pretty much a buy/sell transaction commission), and an overnight fee due to the use of margin (leverage), which will be debited from your position daily, and depends on the level of leverage (as well as direction of the trade).

Hope this clarifies :+1:

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It certainly does! Thank you pal.

I can see now, if you go to reports. You can directly see how much you have paid in the fees for holding them open.

So fair, its been 2 months of holding and its racked up a fair bit HA

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Yes I imagine it would. Yesterday I looked at comparative stock position between a few CFD brokers, and found the following:

  • 1:5 stock CFD on T212 had 0.1% per day fee on a long position, or 36.5% per year!
  • 1:5 stock CFD on Plus500 had a 0.0442% per day (long), or 16.1% per year
  • 1:5 stock CFD on eToro had about 0.018% per day (long), or a 6.5% per year
    (and before anyone says the calculation is wrong, no, those fees are not compounded!)

Keep in mind these fees are applied on the total leveraged position, not your own initial margin requirement. Holding a stock CFD on T212 over any extended period of time looks like pure madness, and would reduce a strong outperformance to almost nothing; it is a suitable position only for very short lived bet on a given catalyst.

On the other hand, it would appear that eToro has reasonable enough fees to keep a position many months or longer and still yield some nice results, but if it was ever the plan, I would rather advice to either use a IBKR margin account, or IBKR CFDs (can be both in a margin or cash account), both would equally cost you about 1.5% per annum.

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