Sometime earlier this afternoon CNBC did a piece on using derivatives to take advantage of the volatility in the market, focusing on the VIX. Interviewed were two professional traders who did this (a) with other people's money; (b) have millions and more to do it with. The thrust of the question was, as with so many of the otherwise fascinating segments, "tell those at home what they should do."
It cannot be done by the individual at home (at least by one who does not have millions, so that his emotions can be held in check. Also the prices and slippage and transaction costs are higher than justified by the risks covered and eat and eat into the principal.)
So what's the point of this segment? Griffiths, who is CNBC's most experienced host, is not experienced in the specific subject, and can never be without taking the years out to actually do it -- trade derivatives. He therefore cannot "know" whether it can be done by those who watch the program.
Those being interviewed who are in a totally different game, are proud to have been invited so they keep quiet.
Except! Randy Fredericks, Director of Derivatives at Charles Schwab, from Austin, to his credit, essentially said trading the VIX options themselves cannot be done by the at-home investor. Without TIVO his explanation was arcane. More later perhaps.
