I have a considerably large position on SVOL, SCHD is about 35% of my Roth IRA SPDR S&P 500 value Tilt ETF is about 31% of my Roth. The rest is covered call ETFs for all 4 US market indexes, international, extra concentration with sector ETFs with energy, health care, utilities, WTI futures and general commodity futures ETFs.
Thanks for sharing your approach. I have a maximum of 5% in any one investment so those allocations would stress me out. Although SCHD is built for low risk so that one I'd argue could warrant a higher allocation than 5% for a dividend growth investor.
I am so big on stocks and it has worked well for me, but I also like to have a well balanced, low-cost set of ETFs that keeps the money in my pocket. How effective is your efts approach returns on the long run with this lot?
hugely effective on my part adhering to well established patterns from a professional standpoint would make you love high yielders efts! I've set up a spreadsheet of high yielders, total allocation to each position, monthly dividends (avg) and I got to say I'm going all in when the time is right (double). I mix both high and low-medium yields in my portfolio, but the higher yielders is the way to go on efts.
High quality content! I own SCHD. I also own individual stocks that I collect dividends and sell covered calls on. SVOL has been a beast there's nothing else to say about it lol
Keep it going! I just crossed the $2 million mark with ETFs & stocks. Biggest positions SCHD, VOO and now looking to build up SVOL. I got $48,800 divs last year in taxable divs. Q2 taxable divs this year was $17,388 this year. I'm 46 and I plan on working until 55.
If one is in their 40s and just started investing (have 401k from work). Should they just focus on growth etf since it will be too late for them to see real benefits with dividends? I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here
I wouldn't say early 40's is 'too late' for anything related to investing. If you have at least 20 years left to put money into the market then I think growth is a nice way to lean. I would still have a balance of the two. I think value/dividends is good to have at any age in any market (with at least a portion of the portfolio). It may seem daunting now but it's possible with the right info. Talk to a F.A if you really aren’t sure…good luck
Thanks for a great update on SVOL......I have held this fund for nearly a year and what a relief that it stood it's ground against this earthquake........buying more on next opening day........cheers
I've been watching Armchair Income for a while now and he seems like a class act. Unlike many other Finance "Influencers" who are taking heat for stearing their viewers down sketchy allies he's pretty much up front with his advise and advises everyone to do their own homework and not just copy his portfolio. Seems like an honarble guy which seems to be in short supply these days with ad revenue hungry financial youtubers so much respect.
Thanks for your feedback, would you like to sign up for my course? Just kidding :) I don't blame TH-camrs for trying to make money but with finance I think its important to set some clear parameters around disclosure. I would never tell another person what they should buy or sell and it makes me cringe when I see other TH-camrs doing that.
I did not truly understand how SVOL works but still bought a couple of shares. And during these couple of volatile days. I have truly seen in real test how it operates. I am convinced this is a keeper.
Glad to read that you didn't buy too much of an investment you don't understand fully. I encourage you to watch the explainer video on the Simplify website and/or my other SVOL videos. Understanding it will make decisions easier when things aren't going well (ie buy more vs sell).
Thank you for that analysis. You did a great job explaining the salient facts about the 3 VIX products, the recent VIX quake, and how SVOL was able to successfully mitigate the damage.
Thanks for taking the time to update us on SVOL. I have held a significant position since Dec. 28. I bought more at a 5% discount one day after the VIX SPIKED (after replaying your videos and noticing the 5 star review on Morningstar.
Thank you for explaining how this fund works. I have a small position in it and I was very impressed with how quickly it snapped back, I am going to slightly increase my position in it. I noticed the last time the VIX rose significantly was last April 15 when it rose to 19%, yet this fund only went down 71 cents a share and within a month SVOL reached a new high. All my investing is within an IRA account.
Thank you for yet another fantastic summary in an efficient and easy to understand format. Your research is so targeted that you seem able to pull the most relevant nuggests without spending hours and hours digging through detail. Sending good mojo your way!!!
I really appreciate that feedback because you described the delicate balance for these videos. It's impossible to cover all the information without turning into a boring encyclopedia.
Awesome as always! Thank you so much for the excellent content! Would be amazing to have Larry Kim on the channel again and hear his reflections on the massive vix surge, and what that day was like at his firm…
Thanks for the suggestion. Adriano beat me to it! Larry was kind enough to answer my emails. I'm sure he had a very busy few days. I'd like to interview him again.
I spent the last part of the week observing SVOL and revisiting your previous videos. As you discuss here it held up well. This week was a great test. Thank you for providing the VIX term structure links.
I've held SVOL for a while now and while the "protection circuits" looked good on paper, it was nice to see that they actually worked as intended when the real thing came along. I used the opportunity to acquire some more shares. While I'm not particularly concerned about price appreciation with this fund, it never hurts to shop when things are on sale!
Thanks for your feedback. I've learned a lot from viewers since I started this channel, same goes for Seeking Alpha members who share info in the comments.
I picked up 200 shares of SVOL on that day for $19.80 with two different standing orders. I love VIX spikes for SVOL. That is when you want to buy more shares. I've been in SVOL almost from the beginning because I'm a big fan of Michael Green and I liked the description of the fund.
Funny you and Dave (WA) released vids same day. This is one of my bigger positions because of its consistency. Wish I would have had the nerve to buy more on Monday. Like to buy on low days then sell my more expensive ones when it gets close to previous highs, but it broke a long-term range that shook me a little. You guys have given me a little relief. Thanks!
Thanks for this very actual ETF! It makes my small SVOL position interesting to grow long term. I missed times to look at your episode on Sunday morning, seem I missed something all day !,😊😊
If you overlay the VIX with the SVOL graph you can see what caused a lot of nav depreciation SVOL had and it’s the repetitive high volatility that really hurts it.
Good advice on not overweighting from reinvesting divs...enjoy your Hussle Girls to close video. Thanks for info which is the main reason for holding SVOL
@@armchairincomechannel your video have been very informative and very useful. I like your honesty, many others feel like they are just trying to pump a stock. Dividend Bull is another good guy.
There's no perfect allocation. It depends on. your appetite for risk and what else is in your portfolio. My allocation is close to 5%. The important thing is not to be 100% in anything :)
SVOL most of the time trades in the 22 - 23 range. I bought it for about 22.50 7 months ago. Last monday it took a dive to 19.80 but until friday it had already recovered until 21.90. And this with a VIX still above 20 ! I think SVOL will recover in the 22 range and this after the first serious test from last monday. I don't see any reason to sell my shares. Every month I get $ 3000 in dividends from SVOL. That's great.
I dollar cost average but only when the price is below the halfway point of the 52-week low/high. Once it gets over that, I stop investing into it. I have done VERY well with this strategy in the last three years. Geez TSLY is doing terrible and yet I am up on total return, that's how well this strategy works. On a side note, XDTE is slowly becoming a favorite of mine. A nice high yield and since inception (yes only since march), it is beating the SP500 (just shy of 2 percent) with total returns. Something to keep an eye on. Keep up the great videos!
I been buying since earlier this year. I have over 100 shares....I can tell you from my experience that it goes up and down between $21.50 and $23.50 making the average price $22.50...i started buying at $23 and kept buying when it went down....the perfect price to buy is between $22.50 and $22.80 and then buy more when it goes down like it has recently...I have the snowball effect, it now buys a little more than 1 share per month.
@@armchairincomechannel There are only 20 ETFs with returns greater than 6% that garner a 5 star rating so I agree they are conservative in their assessment.
VIX and SVOL are at the bar. VIX swaggering up says, 'Want to see my expanding volatility?' SVOL chuckles and replies, 'I’ll pass. I’m here for the steady 16% yield, not the drama. #SVOLandChill
Always have loved SVOL and knew that it would be stable as a rock. It's my main current holding. The best time to buy SVOL would be the Ex dividend date. That's just my opinion
Yes. The protective measures don't eliminate the risk, they dramatically reduce it. During periods of very high volatility, SVOL's performance will usually suffer.
Yen carry day was amazing I immediately went and bought svix and svol while the vix was at 60. Then shortly after they halted trading on it. Made a nice gain and sold them off. Not a great fund to hold long term. Keeping my 300 shares of svol.
Thanks for sharing. Sounds like you have a keen eye and sense of timing for trading. I'm not very active so I miss out on those short term opportunities.
@@armchairincomechannel I traded svix in 2023 and learned how it moved with the vix. I set a vix alert for 30 on seeking alpha and it went off that morning. I was on vacation that Monday. Huge buying opportunity for a lot of tech. I had also traded USD and NVDX.
Just curious to hear your thoughts on the lower payout this month. I like you, own a bunch. Have not liked the lower price but the consistent 30 cent dividend made me overlook it. Looking back at its chart it payed an even higher dividend when the vix was higher so even though the vix is slightly higher this last month, it worries me that the dividend dropped to 28 cents.
@@armchairincomechannel Thanks, that might imply as the fed keeps dropping the rate, svol will keep going down. Hope they figure out a way to counter that.
high vix / volatility will always be part of the stock market as it is emotionally/ fear driven at times. However, even with these inherent high vix risks, SVOL high dividend yield is worth it.
Great job on the svol coverage and update! Do you think Jepi will continue as is no capital appreciation and steady dividend or with the broader market participating Jepi could have modest capital appreciation?
I think JEPI has potential for long term appreciation. It's weighted to value stocks, not tech. So it is likely to appreciate much more slowly than the tech heavy S&P 500. It's also less volatile.
@@armchairincomechannelthanks let’s hope so as the last 24m have been weak on capital appreciation, unless someone bought the lows in October or loaded up last Monday. Last Monday was a great avg down on Jepq
Just a word of warning, the reason SVOL held up was because the spike on the VIX was short lived so the option contracts were not really affected. But during extended periods of volatility on the VIX the fund will lose value, as during the first year of the inception of the fund it lost 20 percent of NAV because of extended volatility, since then the VIX has been fairly stable.
Yes, that's an excellent point. That was addressed in an interview I did with Larry Kim. This recent test showed its resilience to what I think is the largest threat, a large and sudden spike. It doesn't change the fact that there's a lesser but real risk when volatility rises slowly over the long term as happened in 2022. Both of these risks should be considered when deciding whether to hold SVOL and how much to allocate to it.
You're right, there's still risk. A slow and steady rise in the VIX would be a different risk for example. Overall, though, the risk/reward has been good.
As a holder of SVOL I am glad to see it weather the recent turbulence. I don't know if you have read anything about a new Kurv Fund KQQQ It sounds promising for Armchair Income. Would love to hear your thoughts
The problem with the VIX hitting 60. Is it actually didn’t hit 60s, it actually was printing around 40s there was no bids at 60s-50s it was a calculated error at the market makers. So I agree it stood its ground, but only at VIX 40s which is still good but what happens when it’s actually a panic selling event?
Thanks for sharing that. There's always the possibility of a VIX spike that's greater than the last big one. What I took away was that the hedging strategies kicked in and the fund took far fewer losses than its competitors. A bigger spike may still be a risk. They don't pay 16% for zero risk!
Thanks for your encouragement. I mostly try to focus on funds that have more history than those 2. XDTE is off to a good start. If they can maintain their NAV over a longer period than I'm open to potentially buying them / making a video about them. Thanks for the suggestion.
Thank you for the comparison with other funds. I have a small allocation of SVOL, but on Friday 2nd I put in an order to add at $19.75 which got filled the following Monday. Now on its way to fully recover 🙂. I'm guessing it will be volatile for a while so I remain cautious because I wonder if they will cut the distributions, but who knows?
You bought it at a great price.😃 The only thing you really have to worry about is that you might not have bought enough of it and should have bought more.😢
It would be helpful to many if you would address the continually falling distribution rate. Wy this is happening and might they have a plan to turn this around. In Jan of 22 the distribution was roughly 39, it dropped and dropped and dropped some more and now it is 26! And the yield is about 14% - which is still plenty good, but it's getting into a territory of other potential income stocks to hold. At what level would you sell? 13%, 12%? `At the way it is moving downward that could be February or March. Thank you.
Yes, I share your concern as the most recent distribution fell by another penny. There are a few factors. Every time the Fed cuts rates, the income from the credit funds/treasuries falls. Also, if volatility is high (eg 2022) the fund underperforms. I agree that if the total return continues on its current path, I will reconsider holding SVOL.
The spike was huge and caused substantial losses for other inverse VIX funds, so I would classify it as an important test. Also, the close at 38 was relatively high. To your point, yes, a sustained period of elevated VIX would tell us important information, and pose a substantial risk to all inverse VIX funds.
I'm a non US tax resident and most of my audience is based in the US. Therefore my personal tax situation isn't relevant to most viewers. Non-US tax residents like me are subject to tax withholding so we don't have much choice, the money is set aside upon receipt. If I was in the US I'd set aside an estimated amount each month and put it into a 5% cash account.
Bought some SVOL $20 calls expiring in March 2025 for $1.20 on 8/5. That means I’ll effectively be paying $21.20 per share, assuming the price stays above $20. I was waiting before enlarging my position in SVOL to see how it would perform in a vol spike and now we know. I also want to wait before actually buying shares until the sturm und drang of the US election is over which I expect to be the case by March. But by buying calls in the worst of the storm I think I got a price that will continue to seem reasonable. I left room, about 20% of my target holding, for another purchase if some disaster pushes it lower than last week but I don’t foresee that.
It's impossible to predict. The VIX futures term structure is showing that the market expects volatility leading up to the election. I'm just holding, but a trader might try to wait for some election chaos and buy SVOL while the VIX is spiking.
Sorry to hear that. I haven't come across that issue before. If it's not going to your junk mail, the only suggestion I can think of is to try a different email. Past issues can be seen at:armchairinsider.beehiiv.com/
Wouldn’t it make sense for Svol to rally on a rate cut because it makes their yield more valuable? It didn’t really move much so I guess I’m wrong but curious what you think.
The price of SVOL is driven by its assets, not the demand and supply of the investors in the fund. It's the nature of ETFs that if there's an increase in demand, they issue more units. If SVOL was a CEF or a stock then your theory might play out.
Where can I learning about shorting? I am new to this. Or are you saying that the fund does it? I don't know anything about it. I will be retiring with 4 years and want to move some of my investments to income funds.
I don't do any shorting because I consider it too risky. Also, I'm focused on income, not trading. SVOL shorts the VIX by trading futures contracts, which is different from shorting a stock. Shorting the VIX is very risky unless you have a hedge in place, which they do. If you'd like to learn more about how SVOL shorts the VIX, I recommend watching the explanation video on their website, or my previous SVOL videos.
Just the evidence I needed to justify buying more SVOL. Will be selling most (maybe all) of my HRZN to bump SVOL and a few other monthly positions. That rapid spike in the VIX was a little alarming.
What a week it's been for the markets. I have so much more confidence in SVOL and a couple of others after seeing their performance so far! I've been following your strategy for a few months now and appreciate all the 'food for thought' and effort you've put into your videos. I have a question that I hope will be easy for you if you don't mind. Being that you live off of the 8% and reinvest the rest, from which side of the equation do you save for taxes? Do you live off the 8% and reinvest the remaining 4% net of taxes, or do you reinvest the full 4% and take the taxes from the 8% side?
Great to hear the content has been useful for you. I don't go into detail on my own taxes because I'm not a US tax resident and most viewers are US tax residents so my circumstances don't apply. Taxes are withheld on my income by the broker and I file a tax return for the difference. If I was a US investor I'd probably just estimate taxes and put aside a little money each month into a 5% cash account to avoid a larger expense in April.
So, I was going to pull the trigger on SVOL today, but as I was looking over the history of the price and it has been slowly grinding lower and lower. Sure, it recovered from the lows at $19, but it doesn’t seem like it will ever go back to the highs. So, let me ask you all a serious question, it will take almost 6 years to get 100% yield, but if it’s down 50% in 2 years, how am I going to get a return (long term) if my investment drops to $0 within 4 years?
I don't currently hold SVOL in my portfolio. There are occasional periods when it doesn't perform well, specifically when the VIX futures term structure is in backwardation. The backwardation is likely to end after the US election. I intend to buy it back again when the VIX futures term structure is in contango. In other words, it requires some timing to avoid the NAV erosion you've noted. The 16% yield comes with some risk!
We are in the third quarter which has been the worst quarter since 1950. The spike in the $vix is warning of future volatility with the worst month of the year(September) dead ahead. Share price dropping 10% in three days is not risk free.
When the scenario that caused the drop is near “worst case” and the security earns 16% per year in income giving a remaining total return of 6% assuming it recoups none of the losses (which it has already done), it’s pretty close.
I've never used the phrase "risk free" when describing any of my holdings. There's risk. It was a crazy week and SVOL held up well. I don't know what black swan events lie ahead.
@@pmks4 I just don't consider the drop it suffered last Monday as being "crushed". 10% just barely qualifies as a "correction" for the market overall. I would, however, love to see it back at $20 and don't really expect to (baring major war in Europe or Taiwan).
Curious on your thoughts about their dividend being .28 after paying out .30 for so long. Their track record shows that once the dividend is cut it stays that way
Tbills make up a significant proportion of SVOL's assets. The income from those Tbills has been affected by interest rate cuts. In other words, its not about the VIX this time. If more rate cuts come, then there will be more reductions in Tbills/SVOL income. We had it good for a while :)
@@armchairincomechannel thanks for the explanation with that my friend. I’d assume a reduction in dividend will translate to an increase in capital appreciation. I bought heavy on the August flash crash at $21.26 avg price. Hoping it holds for a goooood while
Thanks for the video. I hold a small position in SVOL because I'm intrigued with the strategy and yield, but I still don't quite trust it enough for a full position. I've been monitoring it closely after the spike. It help up fairly well, but I can't help but wonder what happens when an even bigger spike, like the Covid Crash or GFC happens? We know it's gonna take a dive, but can it fully recover?
@@armchairincomechannel that’s great to hear . as a soon to be retiree that plans on using the strategy is final my income generation . The big picture this is a long-term strategy and days like this will happen. I can see why you keep your limit of 5% per equity.
Love the videos and all the great info/ideas. Have you looked at any of the negatively correlated (vs. stocks) ETFs such as CTA or KMLM? Would love to get your thoughts if you've given them a look. Keep the great content coming!
Thanks for your words of encouragement. I haven't looked at CTA or KMLM. The concept sounds interesting but it appears that they don't pay monthly or quarterly distributions, which is my focus (vs reducing volatility).
@@armchairincomechannel - from what I've read (Dividend Sensei on Seeking Alpha), CTA pays quarterly and KMLM pays annually. I believe that both have averaged between 7 - 8% yield, but these wouldn't necessarily be bought for the yield.
0:39 it will lower in the future (ZIVB is better) SVOL is getting too 'crowded' , the more popular it gets the worse it's gonna be. It's a 'short vol' using vix futures - selling certain futures contracts. The more money 'comes in to' SVOL the MOVE futures contracts it has to sell - BUT are there gonna be 'buyers', is the demand for those futures contracts UNLIMITED ?!
Thanks for your feedback. It's a good point, show me a business model with a great margin and I'll show you the focus of future competition...outsized margins don't last forever. SVOL is one to keep an eye on every month for various reasons. They also change their collateral frequently. The point of the video was that they promised their hedge would work during a spike and we got to see it play out.
@armchairincomechannel "The hedge ... work" is how it looks on the surface. What actually happened is: on July 12 2024 svol is $22.81, and it's with ONLY 20% into the short vol = rough only $4.56 'INVESTMENT' in short futures and the rest in bonds. August 5th 2024 svol is $20.05 this is a drop of only 14% compared to the 'stock price' from before $22.81, BUT they actually lost $2.76 of the $4.56 invested and this is more than 50% losses .
@@armchairincomechannel "The hedge ... work" is how it looks on the surface. What actually happened is: on July 12 2024 svol is $22.81, and it's with ONLY 20% into the short vol = rough only $4.56 'INVESTMENT' in short futures and the rest in bonds. August 5th 2024 svol is $20.05 this is a drop of only 14% compared to the 'stock price' from before $22.81, BUT they actually lost $2.76 of the $4.56 invested and this is more than 50% losses .
There's definitely no guarantee! The 16% yield comes with risk. If there are many shocks and a rising VIX, SVOL can lose value. SVOL does best when the market is just doing its normal thing. That's why my allocation is about 5%. If it was a guarantee I'd allocate 100%
@@armchairincomechannel I thought they were selling calls on the vix with a long cal l for protection. Essentially like a wide credit spread. Is that not how it works?
Good question. It depends on how long the term structure remains in Backwardation. At the moment, it's well on the way to returning to Contango, which is great. However, there's a big bump in middle because of the election.
@@armchairincomechannel I asked chatGPT as well. It seems there is really no equivalent. Unbelievable that the big financial institutions don´t at least offer a currency hedged version for European investors. That looks like a big market gap.
Fist of all thank you for sharing the opportunities and info. Personally I feel this one is a little too risky for me. However I liked FSCO you shared not too long ago. Just one question for you - how do u fell about the risks of FSCO since in the disclaimer it did say they may use borrowed money, etc to cover dividends. I.e. not from investment income. And how do u compare this with bxsl? FYI- I bought bxsl sometime around end of last year and just dipped my toe into FSCO after yr sharing. No pressure - understood I take all risks on my own. 😄
BXSL and FSCO are so different that it's impossible to compare them quickly. BXSL is one business development company and FSCO is a fund with a large and diverse basket of loans and bonds. Regarding FSCO distributions, the fund generated 19 cents per share of net investment income in Q1 of 2024…that’s income less expenses. Of that 19 cents, they paid 17 cents per share to investors. So I'm comfortable with their recent history of covering their dividends.
@@armchairincomechannel yes I noticed the NII covers dividend currently so I actually bought some last week too. Will see… thanks! Although bxsl is a bdc and FSCO is not, I think they have very similar business model. Maybe you know more details!
I thought an in dex is just a tracker of how volatile the market is, not an actual thing that could be traded...that it represented anything tangible. So...I must be missing something.
I recently read there is an index on the probability of war based on how crowded gay bars near the Pentagon are on Friday night. I’m not sure if you can trade it though. You can definitely trade the Vix and Vix futures, though, and a lot of hedging is based on it. Also, volatility is built into the price of every options contract.
@@BTinSF That is a hilarious potential index example. 😃 I may or may not have been in one of those gay bars near the pentagon on a Friday night. War was definitely not the main topic.
@@Dallas4X The idea behind that index, I believe, is that when war is imminent the Pentagon war planners are working late and not hanging out in local gay bars. There's a related index having to do with pizza deliveries from places in an around the Pentagon: Those working late are presumably getting pizza deliveries.
"The hedge ... work" is how it looks on the surface. What actually happened is: on July 12 2024 svol is $22.81, and it's with ONLY 20% into the short vol = rough only $4.56 'INVESTMENT' in short futures and the rest in bonds. August 5th 2024 svol is $20.05 this is a drop of only 14% compared to the 'stock price' from before $22.81, BUT they actually lost $2.76 of the $4.56 invested and this is more than 50% losses .
@@armchairincomechannel u mean If we get a black Swan again it might get cut in half r8? ... but u know I noticed something check the asset under management looks like big bois got in it wad 170 mil now at an ath 600 mil
It survived an event that poses the greatest risk to the fund...a VIX spike. That was a test of its risk mitigation strategy. Without the risk mitigation I would consider it too risky. Having said all that, I limit my position to 5% of my portfolio so the risk/reward works for me. I'm not suggesting it's suitable for everybody.
Buyers of VIX futures contracts. They enter those contracts so that if the market crashes they profit from those contracts. Most of the time they lose that money, but when the market crashes it pays off for them.
I don't have a boss, or an obligation to show up for work....so....either retired, or financially independent...more of a mouthful. I'm definitely not an Investment Advisor; just sharing my own research and ideas.
I use Schwab and hold SVOL. They didn't send me any warnings. I don't think any brokerage is doing actual due diligence on each of the 3,000+ ETFs available to investors. It would be more interesting if they explained their specific rationale for the warning (that is presumably auto generated), then compare that explanation to Morningstar's rating of SVOL.
Zivb requires good timing. You're correct that over the past 1 year period, zivb has a higher total return. But over the past 1 month and 6 month periods, svol has a higher total return than zivb.
What do you think about sinking everything into SVOL when the VIX spikes high again?, when the share price is down to $20 or less?. If you had a million to put it in then, you would receive over $150,000 a year to live off of. You would recoup your original one million principle in 7 years or less, and then 100% your investment in 14 years. And that's just based on the dividends, the share price will most likely be up too. Conservatively.
As much as I like SVOL, I cap my allocation to 5% because there are risks with every investment. I would never "sink everything" into any one investment. Diversification allows me to sleep at night and not be too emotionally attached to any company, fund, or event.
@@armchairincomechannel Fantastic advice about diversification. I agree, no more than 5% in any position does allow one to spread risks and avoid land mines in our portfolios. I do even less than 5 on most of my holdings. Three percent allows you to sleep even better at night.
Snowball Dividend Tracker (Create a Free Account, and the 10% Discount will appear under "Subscribe"):
armchairincome.link/snow
I have a considerably large position on SVOL, SCHD is about 35% of my Roth IRA SPDR S&P 500 value Tilt ETF is about 31% of my Roth. The rest is covered call ETFs for all 4 US market indexes, international, extra concentration with sector ETFs with energy, health care, utilities, WTI futures and general commodity futures ETFs.
Thanks for sharing your approach. I have a maximum of 5% in any one investment so those allocations would stress me out. Although SCHD is built for low risk so that one I'd argue could warrant a higher allocation than 5% for a dividend growth investor.
I am so big on stocks and it has worked well for me, but I also like to have a well balanced, low-cost set of ETFs that keeps the money in my pocket. How effective is your efts approach returns on the long run with this lot?
The money man! Sounds like you are absolutely crushing it Joe.
I love ETFs, ended up buying QQQM in my Roth, JEPI, SCHD and few others in my brokerage account.
hugely effective on my part adhering to well established patterns from a professional standpoint would make you love high yielders efts! I've set up a spreadsheet of high yielders, total allocation to each position, monthly dividends (avg) and I got to say I'm going all in when the time is right (double). I mix both high and low-medium yields in my portfolio, but the higher yielders is the way to go on efts.
High quality content! I own SCHD. I also own individual stocks that I collect dividends and sell covered calls on. SVOL has been a beast there's nothing else to say about it lol
The Beast soldiers on! Glad you're enjoying it and thanks for letting me know :)
Keep it going! I just crossed the $2 million mark with ETFs & stocks. Biggest positions SCHD, VOO and now looking to build up SVOL. I got $48,800 divs last year in taxable divs. Q2 taxable divs this year was $17,388 this year. I'm 46 and I plan on working until 55.
If one is in their 40s and just started investing (have 401k from work). Should they just focus on growth etf since it will be too late for them to see real benefits with dividends? I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here
I wouldn't say early 40's is 'too late' for anything related to investing. If you have at least 20 years left to put money into the market then I think growth is a nice way to lean. I would still have a balance of the two. I think value/dividends is good to have at any age in any market (with at least a portion of the portfolio). It may seem daunting now but it's possible with the right info. Talk to a F.A if you really aren’t sure…good luck
@@Otis-the-III Wooooo crushing it!! Amazing!
Thanks for a great update on SVOL......I have held this fund for nearly a year and what a relief that it stood it's ground against this earthquake........buying more on next opening day........cheers
Glad it was helpful :)
I've been watching Armchair Income for a while now and he seems like a class act. Unlike many other Finance "Influencers" who are taking heat for stearing their viewers down sketchy allies he's pretty much up front with his advise and advises everyone to do their own homework and not just copy his portfolio. Seems like an honarble guy which seems to be in short supply these days with ad revenue hungry financial youtubers so much respect.
Thanks for your feedback, would you like to sign up for my course? Just kidding :) I don't blame TH-camrs for trying to make money but with finance I think its important to set some clear parameters around disclosure. I would never tell another person what they should buy or sell and it makes me cringe when I see other TH-camrs doing that.
Thank you for the update. I was also impressed with how well SVOL held up.
That makes two of us :)
I did not truly understand how SVOL works but still bought a couple of shares. And during these couple of volatile days. I have truly seen in real test how it operates. I am convinced this is a keeper.
Glad to read that you didn't buy too much of an investment you don't understand fully. I encourage you to watch the explainer video on the Simplify website and/or my other SVOL videos. Understanding it will make decisions easier when things aren't going well (ie buy more vs sell).
Thank you for that analysis. You did a great job explaining the salient facts about the 3 VIX products, the recent VIX quake, and how SVOL was able to successfully mitigate the damage.
I'm glad it all made sense! Not easy to organize all those numbers and data :)
Thanks for taking the time to update us on SVOL. I have held a significant position since Dec. 28. I bought more at a 5% discount one day after the VIX SPIKED (after replaying your videos and noticing the 5 star review on Morningstar.
Congratulations on picking it up at a nice price :) Glad the content was helpful as part of your research.
SVOL is a keeper, steady reliable yield
I like it too :)
Thank you for explaining how this fund works. I have a small position in it and I was very impressed with how quickly it snapped back, I am going to slightly increase my position in it. I noticed the last time the VIX rose significantly was last April 15 when it rose to 19%, yet this fund only went down 71 cents a share and within a month SVOL reached a new high. All my investing is within an IRA account.
Thanks for your feedback. I'm glad to know the information was useful!
Thank you for yet another fantastic summary in an efficient and easy to understand format. Your research is so targeted that you seem able to pull the most relevant nuggests without spending hours and hours digging through detail. Sending good mojo your way!!!
I really appreciate that feedback because you described the delicate balance for these videos. It's impossible to cover all the information without turning into a boring encyclopedia.
Super video that elegantly explains the beauty of SVOL, and its robustness in times of stress. Thank you.
Glad you enjoyed it! I really appreciate your words of encouragement.
Awesome as always! Thank you so much for the excellent content!
Would be amazing to have Larry Kim on the channel again and hear his reflections on the massive vix surge, and what that day was like at his firm…
Actually he was being interviewed that day -
Thanks for the suggestion. Adriano beat me to it! Larry was kind enough to answer my emails. I'm sure he had a very busy few days. I'd like to interview him again.
Another excellent video. I continue to increase my exposure to Svol based on the test we recently had.
It gave me confidence too. Very happy to see it navigate those choppy waters.
I spent the last part of the week observing SVOL and revisiting your previous videos. As you discuss here it held up well. This week was a great test. Thank you for providing the VIX term structure links.
My pleasure. Thanks for watching and commenting (again).
@@armchairincomechannel comments boost your account, which can help you rank better in TH-cam search results. - for the algo! 😉
I've held SVOL for a while now and while the "protection circuits" looked good on paper, it was nice to see that they actually worked as intended when the real thing came along. I used the opportunity to acquire some more shares. While I'm not particularly concerned about price appreciation with this fund, it never hurts to shop when things are on sale!
I agree! The theory is nice but there's no substitute for a real world test.
Great video and explanation on SVOL and VIX. Thanks for mentioning about reading and learning from the comment section.
Thanks for your feedback. I've learned a lot from viewers since I started this channel, same goes for Seeking Alpha members who share info in the comments.
I picked up 200 shares of SVOL on that day for $19.80 with two different standing orders. I love VIX spikes for SVOL. That is when you want to buy more shares. I've been in SVOL almost from the beginning because I'm a big fan of Michael Green and I liked the description of the fund.
That's a sweet price! Thanks for sharing your strategy.
Another great one! Been considering adding SVOL for a while now. I think I will finally make the leap.
I can't tell you what to do, but I'm glad the information has been useful for you.
Funny you and Dave (WA) released vids same day. This is one of my bigger positions because of its consistency. Wish I would have had the nerve to buy more on Monday. Like to buy on low days then sell my more expensive ones when it gets close to previous highs, but it broke a long-term range that shook me a little. You guys have given me a little relief. Thanks!
Yes, quite a few TH-camrs made similar SVOL videos this week. It was big news!
Great Video. I've been waiting for your newest analysis on SVOL.
Hope you enjoyed it!
Thanks for this very actual ETF! It makes my small SVOL position interesting to grow long term. I missed times to look at your episode on Sunday morning, seem I missed something all day !,😊😊
Glad it was helpful! Thanks for watching :)
If you overlay the VIX with the SVOL graph you can see what caused a lot of nav depreciation SVOL had and it’s the repetitive high volatility that really hurts it.
That makes sense. SVOL profits from low volatility. It was for that reason I stayed out of it during the election.
Great video! appreciate you comparing SVOL against SVIX and SVXY. super helpful
Glad you enjoyed it!
once again great video! this question mark has been nagging me all week and now I'm good with my position too
Glad it was helpful :)
Thank you very much for this video 🙏. SVOL is the highest in my portfolio standing at 18.57% more than my favorite stock Google at 14% 😊
You're welcome. Thanks for sharing your approach. That's a much higher allocation than I have!
Good advice on not overweighting from reinvesting divs...enjoy your Hussle Girls to close video. Thanks for info which is the main reason for holding SVOL
Glad the video was helpful. The dancing girl makes me smile every time so it's great that you appreciate her too!
Nice to see another video from you
Hope you enjoyed it!
@@armchairincomechannel your video have been very informative and very useful. I like your honesty, many others feel like they are just trying to pump a stock. Dividend Bull is another good guy.
I bought some at $22 the week before the spike, and added an equal weighting at $20 the day of the spike.
Ohhhh $20 is a nice price :)
SVOL, allocation 6.7 %. A bit larger than it should be ? Possibly not, given our recent observations.
Always good to see you.
There's no perfect allocation. It depends on. your appetite for risk and what else is in your portfolio. My allocation is close to 5%. The important thing is not to be 100% in anything :)
SVOL most of the time trades in the 22 - 23 range. I bought it for about 22.50 7 months ago. Last monday it took a dive to 19.80 but until friday it had already recovered until 21.90. And this with a VIX still above 20 ! I think SVOL will recover in the 22 range and this after the first serious test from last monday. I don't see any reason to sell my shares. Every month I get $ 3000 in dividends from SVOL. That's great.
SVOL has been good to use both :) Buying the dips has worked well so far.
I hold svol for the income thanks for explaining how this works
You're most welcome!
Thanks as always. I was able to buy the dip.
Good for you! And thanks for watching.
I dollar cost average but only when the price is below the halfway point of the 52-week low/high. Once it gets over that, I stop investing into it. I have done VERY well with this strategy in the last three years. Geez TSLY is doing terrible and yet I am up on total return, that's how well this strategy works. On a side note, XDTE is slowly becoming a favorite of mine. A nice high yield and since inception (yes only since march), it is beating the SP500 (just shy of 2 percent) with total returns. Something to keep an eye on. Keep up the great videos!
Thanks for sharing your strategy. I'll take another look at XDTE, but it's still new as you pointed out.
I been buying since earlier this year. I have over 100 shares....I can tell you from my experience that it goes up and down between $21.50 and $23.50 making the average price $22.50...i started buying at $23 and kept buying when it went down....the perfect price to buy is between $22.50 and $22.80 and then buy more when it goes down like it has recently...I have the snowball effect, it now buys a little more than 1 share per month.
Spot On👍
Thanks for sharing your strategy.
Thanks for the excellent review. Morningstar recently awarded SVOL a 5 Star rating too. That is pretty unique for high yield ETFs.
So I heard. I was a bit surprised. They are usually quite conservative.
@@armchairincomechannel There are only 20 ETFs with returns greater than 6% that garner a 5 star rating so I agree they are conservative in their assessment.
@@txbgould
Would you kindly share some of them🙏🏻
VIX and SVOL are at the bar. VIX swaggering up says, 'Want to see my expanding volatility?' SVOL chuckles and replies, 'I’ll pass. I’m here for the steady 16% yield, not the drama. #SVOLandChill
😆🤑
That's a good summary :)
Always have loved SVOL and knew that it would be stable as a rock. It's my main current holding. The best time to buy SVOL would be the Ex dividend date. That's just my opinion
That's a good point. If you want to maximize yield on cost you could buy it on the Ex-Dividend date.
@armchairincomechannel
Yes sir. I do that with all my yieldmax funds as well
Thanks. Svol is still trading lower about 3% as on date
Yes. The protective measures don't eliminate the risk, they dramatically reduce it. During periods of very high volatility, SVOL's performance will usually suffer.
Yen carry day was amazing I immediately went and bought svix and svol while the vix was at 60. Then shortly after they halted trading on it. Made a nice gain and sold them off. Not a great fund to hold long term. Keeping my 300 shares of svol.
Thanks for sharing. Sounds like you have a keen eye and sense of timing for trading. I'm not very active so I miss out on those short term opportunities.
@@armchairincomechannel I traded svix in 2023 and learned how it moved with the vix. I set a vix alert for 30 on seeking alpha and it went off that morning. I was on vacation that Monday. Huge buying opportunity for a lot of tech. I had also traded USD and NVDX.
This week was devastating for $VIX but SVOL has handled it pretty well. 🎉
Should have bought more when VIX hit > 50.
Investing with hindsight is so much easier than in real time :) I'm happy to see that SVOL held up too.
So you'll wait 4 years for that to happen 😂
They will go up in my power rankings
That makes two of us. Thanks for watching, as always. What a crazy week!
Just curious to hear your thoughts on the lower payout this month. I like you, own a bunch. Have not liked the lower price but the consistent 30 cent dividend made me overlook it. Looking back at its chart it payed an even higher dividend when the vix was higher so even though the vix is slightly higher this last month, it worries me that the dividend dropped to 28 cents.
The dividend dropped this month because interest rates have fallen. That reduces income from the TBills held by SVOL.
@@armchairincomechannel Thanks, that might imply as the fed keeps dropping the rate, svol will keep going down. Hope they figure out a way to counter that.
high vix / volatility will always be part of the stock market as it is emotionally/ fear driven at times. However, even with these inherent high vix risks, SVOL high dividend yield is worth it.
That's true. High volatility is infrequent but always a possibility.
Svol has been a good buy.
I agree :)
Great job on the svol coverage and update!
Do you think Jepi will continue as is no capital appreciation and steady dividend or with the broader market participating Jepi could have modest capital appreciation?
I think JEPI has potential for long term appreciation. It's weighted to value stocks, not tech. So it is likely to appreciate much more slowly than the tech heavy S&P 500. It's also less volatile.
@@armchairincomechannelthanks let’s hope so as the last 24m have been weak on capital appreciation, unless someone bought the lows in October or loaded up last Monday. Last Monday was a great avg down on Jepq
I have my eye on Svol when I will need to boost my passive income. Right now, as a barista, I am in Qualified dividend funds for taxes purposes.
That makes a lot of sense. While you're working its important to make tax efficient investments.
Just a word of warning, the reason SVOL held up was because the spike on the VIX was short lived so the option contracts were not really affected. But during extended periods of volatility on the VIX the fund will lose value, as during the first year of the inception of the fund it lost 20 percent of NAV because of extended volatility, since then the VIX has been fairly stable.
Yes, that's an excellent point. That was addressed in an interview I did with Larry Kim. This recent test showed its resilience to what I think is the largest threat, a large and sudden spike. It doesn't change the fact that there's a lesser but real risk when volatility rises slowly over the long term as happened in 2022. Both of these risks should be considered when deciding whether to hold SVOL and how much to allocate to it.
It held in pretty good imo. Still risky but I'm adding each month.
You're right, there's still risk. A slow and steady rise in the VIX would be a different risk for example. Overall, though, the risk/reward has been good.
Excellent video thanks
Glad it was helpful!
Impressive performance with a 300% Vix spike it was only down 11% at peak.
Yes, I agree. It could have been much worse for SVOL...and it was for its competition.
I have a couple of hundred shares but I want to see how it handles more spikes before adding to my position. It does look promising.
I hope those spikes don't happen for a while. That was a crazy week!
As a holder of SVOL I am glad to see it weather the recent turbulence. I don't know if you have read anything about a new Kurv Fund KQQQ It sounds promising for Armchair Income. Would love to hear your thoughts
I've been researching KQQQ and agree it looks interesting. I'm waiting for more data (including distributions) before forming an opinion on it.
The problem with the VIX hitting 60. Is it actually didn’t hit 60s, it actually was printing around 40s there was no bids at 60s-50s it was a calculated error at the market makers.
So I agree it stood its ground, but only at VIX 40s which is still good but what happens when it’s actually a panic selling event?
Thanks for sharing that. There's always the possibility of a VIX spike that's greater than the last big one. What I took away was that the hedging strategies kicked in and the fund took far fewer losses than its competitors. A bigger spike may still be a risk. They don't pay 16% for zero risk!
Hi your ETF Stocks are awesome, I'm investing on 3 of your ETF you mentioned, is it possible you can do a video of QTDE AND XTDE thanks
Thanks for your encouragement. I mostly try to focus on funds that have more history than those 2. XDTE is off to a good start. If they can maintain their NAV over a longer period than I'm open to potentially buying them / making a video about them. Thanks for the suggestion.
Thank you for the comparison with other funds. I have a small allocation of SVOL, but on Friday 2nd I put in an order to add at $19.75 which got filled the following Monday. Now on its way to fully recover 🙂. I'm guessing it will be volatile for a while so I remain cautious because I wonder if they will cut the distributions, but who knows?
That $19.75 buy is looking pretty sweet!
You bought it at a great price.😃 The only thing you really have to worry about is that you might not have bought enough of it and should have bought more.😢
It would be helpful to many if you would address the continually falling distribution rate. Wy this is happening and might they have a plan to turn this around. In Jan of 22 the distribution was roughly 39, it dropped and dropped and dropped some more and now it is 26! And the yield is about 14% - which is still plenty good, but it's getting into a territory of other potential income stocks to hold. At what level would you sell? 13%, 12%? `At the way it is moving downward that could be February or March. Thank you.
Yes, I share your concern as the most recent distribution fell by another penny. There are a few factors. Every time the Fed cuts rates, the income from the credit funds/treasuries falls. Also, if volatility is high (eg 2022) the fund underperforms. I agree that if the total return continues on its current path, I will reconsider holding SVOL.
Hardly a test. Vix didn't hold its ground for even 4 hours. You need a protracted time frame for a true test. Still holding some.
The spike was huge and caused substantial losses for other inverse VIX funds, so I would classify it as an important test. Also, the close at 38 was relatively high. To your point, yes, a sustained period of elevated VIX would tell us important information, and pose a substantial risk to all inverse VIX funds.
How do you prepare for taxes in a standard investing account?
I know you can't give tax advice.
So I'm looking for an example of what you do?
I'm a non US tax resident and most of my audience is based in the US. Therefore my personal tax situation isn't relevant to most viewers. Non-US tax residents like me are subject to tax withholding so we don't have much choice, the money is set aside upon receipt. If I was in the US I'd set aside an estimated amount each month and put it into a 5% cash account.
Bought some SVOL $20 calls expiring in March 2025 for $1.20 on 8/5. That means I’ll effectively be paying $21.20 per share, assuming the price stays above $20. I was waiting before enlarging my position in SVOL to see how it would perform in a vol spike and now we know. I also want to wait before actually buying shares until the sturm und drang of the US election is over which I expect to be the case by March. But by buying calls in the worst of the storm I think I got a price that will continue to seem reasonable. I left room, about 20% of my target holding, for another purchase if some disaster pushes it lower than last week but I don’t foresee that.
Based on the shape of the VIX term structure, a lot of other people are waiting until after the election too.
Considering hopping on the SVOL train recently. With the pending election - is this a major risk move until things settle post election?
It's impossible to predict. The VIX futures term structure is showing that the market expects volatility leading up to the election. I'm just holding, but a trader might try to wait for some election chaos and buy SVOL while the VIX is spiking.
It was far more resilient than I had thought. Unlike RYLD and QYLD.
Yes, good point!
Keep trying to sign up for your Armchair Insider, but can not get a sign-up link to my email. Any ideas?
Sorry to hear that. I haven't come across that issue before. If it's not going to your junk mail, the only suggestion I can think of is to try a different email. Past issues can be seen at:armchairinsider.beehiiv.com/
Wouldn’t it make sense for Svol to rally on a rate cut because it makes their yield more valuable? It didn’t really move much so I guess I’m wrong but curious what you think.
The price of SVOL is driven by its assets, not the demand and supply of the investors in the fund. It's the nature of ETFs that if there's an increase in demand, they issue more units. If SVOL was a CEF or a stock then your theory might play out.
@@armchairincomechannelso if rates went to 0% or 12% it wouldn’t matter. Hmmm
Where can I learning about shorting? I am new to this. Or are you saying that the fund does it? I don't know anything about it. I will be retiring with 4 years and want to move some of my investments to income funds.
I don't do any shorting because I consider it too risky. Also, I'm focused on income, not trading. SVOL shorts the VIX by trading futures contracts, which is different from shorting a stock. Shorting the VIX is very risky unless you have a hedge in place, which they do. If you'd like to learn more about how SVOL shorts the VIX, I recommend watching the explanation video on their website, or my previous SVOL videos.
@@armchairincomechannel oh ok I understand. Thank you very much!!
Just the evidence I needed to justify buying more SVOL. Will be selling most (maybe all) of my HRZN to bump SVOL and a few other monthly positions. That rapid spike in the VIX was a little alarming.
thanks for your feedback. Nice to see calm restored after a crazy week!
Great and Timely info. Considering a lot of your top 10 are pretty new also, can you do similar August 5 postmortem on your other top ten investment?
Thanks for the suggestion. As the portfolio gradually shifts, I do want to update it.
So on a $100,000 you buy about 450 shares and at .30 cents a month thats $135 a month?
4,5000 shares.The yield is approx 16%. The annual income is currently approx 16,000 on a 100,000 purchase price.
What a week it's been for the markets. I have so much more confidence in SVOL and a couple of others after seeing their performance so far! I've been following your strategy for a few months now and appreciate all the 'food for thought' and effort you've put into your videos. I have a question that I hope will be easy for you if you don't mind. Being that you live off of the 8% and reinvest the rest, from which side of the equation do you save for taxes? Do you live off the 8% and reinvest the remaining 4% net of taxes, or do you reinvest the full 4% and take the taxes from the 8% side?
Great to hear the content has been useful for you. I don't go into detail on my own taxes because I'm not a US tax resident and most viewers are US tax residents so my circumstances don't apply. Taxes are withheld on my income by the broker and I file a tax return for the difference. If I was a US investor I'd probably just estimate taxes and put aside a little money each month into a 5% cash account to avoid a larger expense in April.
agree.. doubled down..
If I wasn't at a full allocation I'd do the same.
So, I was going to pull the trigger on SVOL today, but as I was looking over the history of the price and it has been slowly grinding lower and lower. Sure, it recovered from the lows at $19, but it doesn’t seem like it will ever go back to the highs. So, let me ask you all a serious question, it will take almost 6 years to get 100% yield, but if it’s down 50% in 2 years, how am I going to get a return (long term) if my investment drops to $0 within 4 years?
I don't currently hold SVOL in my portfolio. There are occasional periods when it doesn't perform well, specifically when the VIX futures term structure is in backwardation. The backwardation is likely to end after the US election. I intend to buy it back again when the VIX futures term structure is in contango. In other words, it requires some timing to avoid the NAV erosion you've noted. The 16% yield comes with some risk!
@ Thank you. Great advice. I wanna add it to my portfolio, but only if it makes sense.
We are in the third quarter which has been the worst quarter since 1950. The spike in the $vix is warning of future volatility with the worst month of the year(September) dead ahead. Share price dropping 10% in three days is not risk free.
When the scenario that caused the drop is near “worst case” and the security earns 16% per year in income giving a remaining total return of 6% assuming it recoups none of the losses (which it has already done), it’s pretty close.
I've never used the phrase "risk free" when describing any of my holdings. There's risk. It was a crazy week and SVOL held up well. I don't know what black swan events lie ahead.
@@BTinSF we'll have to revisit this in the next two months after it gets crushed again.
@@pmks4 I just don't consider the drop it suffered last Monday as being "crushed". 10% just barely qualifies as a "correction" for the market overall. I would, however, love to see it back at $20 and don't really expect to (baring major war in Europe or Taiwan).
@@BTinSF 10%drop in one day is normal?
Curious on your thoughts about their dividend being .28 after paying out .30 for so long. Their track record shows that once the dividend is cut it stays that way
Tbills make up a significant proportion of SVOL's assets. The income from those Tbills has been affected by interest rate cuts. In other words, its not about the VIX this time. If more rate cuts come, then there will be more reductions in Tbills/SVOL income. We had it good for a while :)
@@armchairincomechannel thanks for the explanation with that my friend. I’d assume a reduction in dividend will translate to an increase in capital appreciation. I bought heavy on the August flash crash at $21.26 avg price. Hoping it holds for a goooood while
Thanks for the video. I hold a small position in SVOL because I'm intrigued with the strategy and yield, but I still don't quite trust it enough for a full position. I've been monitoring it closely after the spike. It help up fairly well, but I can't help but wonder what happens when an even bigger spike, like the Covid Crash or GFC happens? We know it's gonna take a dive, but can it fully recover?
There's no way to predict how it, or any investment will respond to a new and unknown black swan event.
What do you make of some of the “return” coming from return of capital? That doesn’t seem like profit to me. Can you clarify?
It's a tax treatment of some of the income they generate, as explained in this interview: th-cam.com/video/EUVnZg0IH-U/w-d-xo.html
Thanks!
Is return on capital a good thing? Does it reduce your shares and thus your return?
Great information, overall, how did the rest of the income portfolio make out during the correction compared to the s and p thanks
My portfolio was down 0.45% for the week. It was a volatile week but by the end of the week, the needle had barely moved :)
@@armchairincomechannel that’s great to hear . as a soon to be retiree that plans on using the strategy is final my income generation . The big picture this is a long-term strategy and days like this will happen. I can see why you keep your limit of 5% per equity.
Love the videos and all the great info/ideas. Have you looked at any of the negatively correlated (vs. stocks) ETFs such as CTA or KMLM? Would love to get your thoughts if you've given them a look. Keep the great content coming!
Thanks for your words of encouragement. I haven't looked at CTA or KMLM. The concept sounds interesting but it appears that they don't pay monthly or quarterly distributions, which is my focus (vs reducing volatility).
@@armchairincomechannel - from what I've read (Dividend Sensei on Seeking Alpha), CTA pays quarterly and KMLM pays annually. I believe that both have averaged between 7 - 8% yield, but these wouldn't necessarily be bought for the yield.
0:39 it will lower in the future (ZIVB is better)
SVOL is getting too 'crowded' , the more popular it gets the worse it's gonna be. It's a 'short vol' using vix futures - selling certain futures contracts. The more money 'comes in to' SVOL the MOVE futures contracts it has to sell - BUT are there gonna be 'buyers', is the demand for those futures contracts UNLIMITED ?!
Thanks for your feedback. It's a good point, show me a business model with a great margin and I'll show you the focus of future competition...outsized margins don't last forever. SVOL is one to keep an eye on every month for various reasons. They also change their collateral frequently. The point of the video was that they promised their hedge would work during a spike and we got to see it play out.
@armchairincomechannel
"The hedge ... work" is how it looks on the surface. What actually happened is: on July 12 2024 svol is $22.81, and it's with ONLY 20% into the short vol = rough only $4.56 'INVESTMENT' in short futures and the rest in bonds. August 5th 2024 svol is $20.05 this is a drop of only 14% compared to the 'stock price' from before $22.81, BUT they actually lost $2.76 of the $4.56 invested and this is more than 50% losses .
@@armchairincomechannel
"The hedge ... work" is how it looks on the surface. What actually happened is: on July 12 2024 svol is $22.81, and it's with ONLY 20% into the short vol = rough only $4.56 'INVESTMENT' in short futures and the rest in bonds. August 5th 2024 svol is $20.05 this is a drop of only 14% compared to the 'stock price' from before $22.81, BUT they actually lost $2.76 of the $4.56 invested and this is more than 50% losses .
Your videos are always spot on. You are like a father to me, even tho I am 48 years old. 😂
I hope I don't look like the father of a 48 year old ;) Hopefully that means I have something useful to say. I appreciate the compliment!
Except if your living off of the dividends, price has to hang in there at least even else you bought an annuity with no guarantee.
Buy the dips, that will lower the risks significantly.
There's definitely no guarantee! The 16% yield comes with risk. If there are many shocks and a rising VIX, SVOL can lose value. SVOL does best when the market is just doing its normal thing. That's why my allocation is about 5%. If it was a guarantee I'd allocate 100%
What delta does svol sell options at? Im assuming they sell naked calls?
SVOL does not sell any calls. It buys calls to mitigate losses during a VIX spike. The income generation is from trading VIX futures contracts.
@@armchairincomechannel I thought they were selling calls on the vix with a long cal l for protection. Essentially like a wide credit spread. Is that not how it works?
Great Video! I'm wondering how much the dividend is going to decrease.
Good question. It depends on how long the term structure remains in Backwardation. At the moment, it's well on the way to returning to Contango, which is great. However, there's a big bump in middle because of the election.
Is there an equivalent to SVOL investing in European futures so that there is no currency risk for European investors?
I'm not familiar with the European offerings, but I've not heard of a Euro version of SVOL.
@@armchairincomechannel I asked chatGPT as well. It seems there is really no equivalent. Unbelievable that the big financial institutions don´t at least offer a currency hedged version for European investors. That looks like a big market gap.
Do you know why SVOL has 100% maintenance?
I don't know what you're referring to when you say "maintenance".
@@armchairincomechannelI think they meant it’s “expense”. Currently at 1.16%. High no?
Declaring victory may be a bit premature.
I would never declare victory. Nothing is for certain for ever. However, there was a test last week, and it passed that particular test.
Fist of all thank you for sharing the opportunities and info. Personally I feel this one is a little too risky for me. However I liked FSCO you shared not too long ago. Just one question for you - how do u fell about the risks of FSCO since in the disclaimer it did say they may use borrowed money, etc to cover dividends. I.e. not from investment income. And how do u compare this with bxsl? FYI- I bought bxsl sometime around end of last year and just dipped my toe into FSCO after yr sharing. No pressure - understood I take all risks on my own. 😄
BXSL and FSCO are so different that it's impossible to compare them quickly. BXSL is one business development company and FSCO is a fund with a large and diverse basket of loans and bonds. Regarding FSCO distributions, the fund generated 19 cents per share of net investment income in Q1 of 2024…that’s income less expenses. Of that 19 cents, they paid 17 cents per share to investors. So I'm comfortable with their recent history of covering their dividends.
@@armchairincomechannel yes I noticed the NII covers dividend currently so I actually bought some last week too. Will see… thanks! Although bxsl is a bdc and FSCO is not, I think they have very similar business model. Maybe you know more details!
I thought an in dex is just a tracker of how volatile the market is, not an actual thing that could be traded...that it represented anything tangible. So...I must be missing something.
Nowadays you can trade even your dirty underwear as a commodity or perhaps as an index..
I recently read there is an index on the probability of war based on how crowded gay bars near the Pentagon are on Friday night. I’m not sure if you can trade it though.
You can definitely trade the Vix and Vix futures, though, and a lot of hedging is based on it. Also, volatility is built into the price of every options contract.
You can't buy or sell the vix index itself, but you can trade vix futures contracts.
@@BTinSF That is a hilarious potential index example. 😃
I may or may not have been in one of those gay bars near the pentagon on a Friday night. War was definitely not the main topic.
@@Dallas4X The idea behind that index, I believe, is that when war is imminent the Pentagon war planners are working late and not hanging out in local gay bars. There's a related index having to do with pizza deliveries from places in an around the Pentagon: Those working late are presumably getting pizza deliveries.
"The hedge ... work" is how it looks on the surface. What actually happened is: on July 12 2024 svol is $22.81, and it's with ONLY 20% into the short vol = rough only $4.56 'INVESTMENT' in short futures and the rest in bonds. August 5th 2024 svol is $20.05 this is a drop of only 14% compared to the 'stock price' from before $22.81, BUT they actually lost $2.76 of the $4.56 invested and this is more than 50% losses .
You make a good point. SVOL isn't 100% invested in shorting the VIX so it inherently can't lose everything in one day.
Which platform can you buy it on?
Trading 212 wont let me.
Trading212 wont let me.
Any major brokerage...eg. Schwab, Etrade. I'm not familiar with the firm you mentioned.
Svix now have a higher potential
SVIX has a higher potential and more downside risk.
@@armchairincomechannel u mean If we get a black Swan again it might get cut in half r8? ... but u know I noticed something check the asset under management looks like big bois got in it wad 170 mil now at an ath 600 mil
I'm surprised you're in svol, seems like your portfolio is a little more conservative than that
It survived an event that poses the greatest risk to the fund...a VIX spike. That was a test of its risk mitigation strategy. Without the risk mitigation I would consider it too risky. Having said all that, I limit my position to 5% of my portfolio so the risk/reward works for me. I'm not suggesting it's suitable for everybody.
Who is losing money whilst us SVOL holders are making money ?
Buyers of VIX futures contracts. They enter those contracts so that if the market crashes they profit from those contracts. Most of the time they lose that money, but when the market crashes it pays off for them.
Enjoy your content!
You should not say you retired--it is for losers!
Better to say you are a TH-camr, Investment Adviser, or whatever.
I don't have a boss, or an obligation to show up for work....so....either retired, or financially independent...more of a mouthful. I'm definitely not an Investment Advisor; just sharing my own research and ideas.
Charlie Schwab warns you before you do anything with SVOL. Says something to the effect of "Better know what your doing". 😳
I use Schwab and hold SVOL. They didn't send me any warnings. I don't think any brokerage is doing actual due diligence on each of the 3,000+ ETFs available to investors. It would be more interesting if they explained their specific rationale for the warning (that is presumably auto generated), then compare that explanation to Morningstar's rating of SVOL.
@@armchairincomechannel I don't own it. Maybe that's the difference. Good cast as always!
Be greedy when others are fearful
That usually works quite well.
This quote is getting old 😂
Have you seen UVIX shooting up? Elon Musk and Space X must have gotten jealous ... 😜
I don't follow UVI but presumably because its leveraged it went to the moon :)
Zivb pays better dividends and beat Svol
Zivb requires good timing. You're correct that over the past 1 year period, zivb has a higher total return. But over the past 1 month and 6 month periods, svol has a higher total return than zivb.
It looks like everybody is keeping it. It's been a week and I still can't get my buying order filled.
I'm keeping mine. Sorry to hear your order was delayed. I recommend having 2 or 3 brokerages for situations like this.
@armchair
Is the issue of availability for certain tickers significant enough to have more than 1 brokerage just for that reason?
What do you think about sinking everything into SVOL when the VIX spikes high again?, when the share price is down to $20 or less?. If you had a million to put it in then, you would receive over $150,000 a year to live off of. You would recoup your original one million principle in 7 years or less, and then 100% your investment in 14 years. And that's just based on the dividends, the share price will most likely be up too. Conservatively.
As much as I like SVOL, I cap my allocation to 5% because there are risks with every investment. I would never "sink everything" into any one investment. Diversification allows me to sleep at night and not be too emotionally attached to any company, fund, or event.
@@armchairincomechannel Fantastic advice about diversification. I agree, no more than 5% in any position does allow one to spread risks and avoid land mines in our portfolios. I do even less than 5 on most of my holdings. Three percent allows you to sleep even better at night.