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MLby u/murphy_lotte·1moDiscussion

Using VIX Futures for Hedging Portfolios

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?

3 comments · 0 points

3 Comments

NJu/neha_j·1mo

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?

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LUu/lukanagy·1mo

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.

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NJu/neha_j·1mo

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.

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