Anyone actively using VIX futures or options on VIX futures to hedge broader portfolio risks? What are your typical contract sizes and duration to achieve a reasonable hedge without significant drag?
I've dabbled in VIX futures for hedging but found the decay a real killer. It feels like you need to be constantly rolling contracts, which eats into any potential benefits unless there's a significant downturn. What's your strategy for managing that decay?
Honestly, for general portfolio hedging, I stick to less exotic instruments like inverse ETFs or even just holding a higher cash position during uncertain times. VIX futures feel more like a specialized trading tool than a broad hedging solution for most retail portfolios.
I use VIX options, specifically puts on VIX futures, as a small, tactical hedge. They're more capital efficient than futures directly and can offer a decent payout if volatility spikes, without the constant decay of holding futures outright. Key is to keep position size small and not over-rely on it.