Monday, December 07, 2009
How to go long on VIX
See my new blog post on this subject for an updated version.
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How to go long on VIX
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Markets have always allowed us to bet
on fear or greed. Now we can bet on volatility too...
2 comments:
go long? what does that even mean?
Hi Heidi, The short answer is that to "go long", is a synonym for "to buy."
On a subtler level, it is an indication that you are expecting what ever you are buying, to go up in value, and even subtler, it is an indication that it is an opening transaction, rather than a closing one.
Generally in the real world, you have to buy something, before you can sell it, but in financial world in some cases you can sell something before you buy it. This is called "going short". The reason for doing this is that if the value of what you sold goes down you can close out the transaction by buying it at a lower price than you sold it, and make a profit in the process.
Going long, in this case indicates that your beginning move is the more typical buy transaction, rather than selling something.
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