In the May 2012 newsletter article “Volatility Futures: Relative Strength: A Family of Futures Products”, we discussed various methods of trading volatility futures products as spreads or indicators, with some discussion of their basic characteristics.

This article will provide discussion of trading methods for individual volatility futures products. The CBOE Volatility Index® (VIX®) futures contract tends to be mean-reverting and trades within a range bound market.

Excluding the 2008 financial crisis, the VIX level tends to fluctuate between 40 and 10. For liquidity seeking traders, hedgers or managers, the chart below demonstrates the increasing volume and open interest in VIX futures, making it a viable choice for a liquid portfolio.

VIX futures trading volume recently reached a new high on three fronts:

1) In August 2012, the VIX futures average daily volume increased by 4.6% to 83,016 contracts versus August 2011 volume of 79,402 contracts.

2) The total volume year to date trading volume in VIX futures has increased by 59% to 13.7 million contracts versus January through August of 2011 volume of 8.6 million contracts.

3) On September 13, 2012 the VIX futures contract reached a new single-day volume record of 190,081 contracts traded. The previous record was 159,744 contracts traded on June 8, 2012.

In a range bound market, long term directional trading may not work as well as it would in other futures markets. Overbought and oversold indicators may have greater utility value. However in the shorter term (duration of days and weeks), directional trades may offer some value.

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Copyright ©2012 Mark Shore. Contact the author for permission for republication at info@shorecapmgmt.com Mark Shore has more than 20 years of experience in the futures markets and managed futures, publishes research, consults on alternative investments and conducts educational workshops. www.shorecapmgmt.com

Mark Shore is also an Adjunct Professor at DePaul University’s Kellstadt Graduate School of Business in Chicago where he teaches a managed futures / global macro course and an Adjunct at the New York Institute of Finance. Mark is a contributing writer to CBOE’s Chicago Futures Exchange and to Reuters HedgeWorld.

Past performance is not necessarily indicative of future results.  There is risk of loss when investing in futures and options.  Always review a complete CTA disclosure document before investing in any Managed Futures program.  Managed futures can be a volatile and risky investment; only use appropriate risk capital; this investment is not for everyone.  The opinions expressed are solely those of the author and are only for educational purposes. Please talk to your financial advisor before making any investment decisions.

What’s news around the hedge fund industry for Friday, Sept. 28, 2012:

Around the web

HK considers adding renminbi hedge funds. (MSPNews)

Mason Capital says Telus voting shareholders need compensation. (Canadian Business)

Soros donates $1.5 million to pro-Obama super PACs. (Washington Post)

The end of London. (TABBForum, registration required but worth it)

Brussels steps up probe of into CDS trading. (Financial Times)

Buy side seeks more automation of order flow. (The Trade News)

Hedge funds bullish on silver as hoard nears record. (Bloomberg)

SS&C gains one more administrator. (HedgeFund.net)

Professional Offshore Opportunity Fund’s Brett Berger to pay more than $6.8 million to settle regulatory charges he stuck investors with losing trades. (New York Post)

SSgA report highlights continued concerns about tail risk events among institutional investors. (Daily Finance)

CDS rules and the law of unintended consequences. (WSJ’s The Euro Crisis blog)

Lincoln (Neb.) Fire and Police Retirement System quits hedge funds. (FINalternatives)

Michael Saigh developing fund backed by rare art, collectibles, fine wines. (St. Louis Business Journal)

Pensions experts welcome Wheatley review of LIBOR, but call for more clarity. (IPE.com)

South African hedge fund group Peregrine Holdings to close consulting arm. (Opalesque)

CCPs afforded flexibility in ESMA’s swaps rules. (The Trade News)

CFTC’s Scott O’Malia says cross-border approach suffers from flaws. (Automated Trader)

The secrets of Warren Buffett’s success: Beating the market with beta. (The Economist)

Nelson Peltz is still scaring companies. (Bloomberg Businessweek)

Hedge fund closures in 2012: What’s the reason? (HFR, via HedgeFund.net)

Directive with a direct impact on hedge funds. (HedgeFund.net)

People moves

CQS hires former SAC Capital manager David Morant. (FINalternatives)

Brevan Howard hires Deutsche Bank’s Vinay Pande for new U.S. Group. (Bloomberg)

Here we take a look at the August 2012 and year-to-date through August performance for the top 5 long/short equity funds, as tracked by Lipper’s hedge fund database. To see more analysis, including assets under management and domicile information for the top 10 funds, click here. To be truly connected to all the Lipper analytics available on HedgeWorld, become a HedgeWorld Premium Plus member. To find out more about how to do that, visit hedgeworld.com/membership/.

What’s news around the hedge fund industry for Thursday, Sept. 27, 2012:

Around the web

Brencourt Advisors liquidating hedge funds. (WSJ.com)

Deutsche Bank’s Hal Lehr quits for hedge fund with associates. (Bloomberg)

Tony D’Andraia launches Hyaline Capital Management, a macro-driven long/short equity fund. (Opalesque)

Fewest hedge funds at high-water mark. (Institutional Investor, via FINalternatives)

Ex-Osiris Partners CEO Michael Spak pleads guilty to $4 million fraud (Bloomberg)

Simons gives $4 million to Democratic super PACs. (NYTimes.com)

North Carolina college students launch Lumina Investments. (FINalternatives)

Credit Suisse may revamp asset management unit. (WSJ.com)

Ackman greets P&G’s McDonald with 75 pages of complaints. (Cincinnati Business Courier)

Taming the high-speed traders. (DealBook)

Outsourcing dilemma: Should you relinquish back-office control to cut costs? (Citywire)

Pivot Capital Management joins BTG to defy Louis Bacon’s investment desert. (Bloomberg)

After Lehman, Erin Callan bids New York farewell; puts East Hampton home up for sale. (DealBook)

CFTC gives more time to comply with pre-trade screening rules. (Reuters)

New studies highlight uncertain future for swaps trading. (The Trade News)

Thin hedge fund bonuses expected in wake of weak returns. (New York Post)

Creditor lawsuit could undo elements of 2009 GM bailout. (Deal Journal)

FINRA looking at brokerage conflicts involving complex products. (Reuters)

Freddie Mac wins dismissal of shareholder lawsuit. (Reuters)

People moves

Reshuffled JPMorgan prime unit loses tech. chief Robert Murphy. (FINalternatives)

Here we take a look at the August 2012 and year-to-date through August performance for the top 5 global macro funds, as tracked by Lipper’s hedge fund database. To see more analysis, including assets under management and domicile information for the top 10 funds, click here. To be truly connected to all the Lipper analytics available on HedgeWorld, become a HedgeWorld Premium Plus member. To find out more about how to do that, visit hedgeworld.com/membership/.

First and foremost, do not ever lie in a hedge fund interview.

“Then you don’t have anything to remember,” said Mitch Ackles, President of the Hedge Fund Association and CEO of Hedge Fund PR. “Make sure that everything is truthful and above board. Be completely clear if you’ve ever had any black marks on your record, if you’ve ever had any disciplinary actions from a regulatory agency. Be very clear. Be honest and upfront about everything.”

Ackles said that job seekers should thoroughly investigate the firm that they want to work for. “Learn everything you can about the firm’s culture,” Ackles advised. “See if they have a LinkedIn group. See if there are press releases. See if there’s a sense of their corporate approaches, how well they treat their employees. Be informed going in, that is vitally important.”

Many of these films like to build a team of people that are a family, Ackles explained. “So if you get a larger firm, it might be 200+ people, and they have a cafeteria, and a restaurant, and a softball team,” said Ackles, reiterating the importance of being informed.

“Definitely dress for the job you want, not necessarily the job you have or don’t have. It’s very important that you dress appropriately. That doesn’t mean you have to have the most expensive suit, but be presentable. Clean-shaven. Look like you expect they want you to look. In Europe, long hair might be okay, but you only need to walk through Midtown in New York to see what most hedge funds look like.”

Ackles acknowledged that the rules are a “little different” for women. “Don’t wear too short a skirt, don’t have too much makeup on, realize that you’re working in Wall Street, which is an industry still predominantly men, and you need to be taken seriously, and part of that is how you present yourself,” said Ackles. “That doesn’t mean you can’t look beautiful like you might be, but you want to take that into account.”

Whatever you do, don’t forget your references. “If you get the interview and you get to sit down with people, make sure you’re prepared,” Ackles recommended. “[Make sure] you have physical copies of your resume, you have reference letters, you have people that are willing to speak up on your behalf.”

Last but not least, Ackles said that the other thing to figure out is, “What about their strategy is interesting?”

“If you’re coming in and you want to be a trader, which means you want to be part of a team that delivers alpha to their investors, see if you can get hold of their performance reports,” Ackles suggested. “See if you can get hold of what they’ve done, what their approach might be. Get as much information as possible so that you go in understanding what value you can bring to the table. They execute in bonds—what’s your thesis? Does it match theirs?”

This content originally appeared on StreetID, a financial career networking, matchmaking and news site. To learn more about StreetID, visit StreetID.com. StreetID’s financial career news can be found on its blog, streetid.com/newsblog/.

What’s news around the hedge fund industry for Wednesday, Sept. 26, 2012:

Around the web

Western Wind shareholders reject Savitr Capital challenge. (Vancouver Province)

Bumi woes dent Nat Rothschild fortune – and reputation. (The Guardian)

RBS traders boasted of LIBOR ‘cartel’. (The Telegraph)

How can investors achieve diversification today? Asset concentration into large managers not the way. (Benzinga)

Wide interest in Rae’s resort. (The Australian)

360 Capital confident of winning listing support. (The Australian)

Proxy advisers oppose Clinton Group’s Wet Seal proposal. (MarketWatch)

Glencore’s sweetened bid for Xstrata may have an unpalatable condition. (DealBook)

Fifth SAC Capital fund manager – Michael Steinberg – tied to insider trading. (Bloomberg Businessweek)

‘Hedge fund madam’ strikes deal. (FINalternatives)

A3E Capital launches emerging markets bond and currency fund. (FINalternatives)

Leopard Capital Asia Frontier fund up 0.9% in August. (FINalternatives)

Impax Asset Management opens North American office in NYC. (FINalternatives)

Shemara Wikramanayake: Macquarie’s rising star. (The Age)

Former programmer Sergey Aleynikov demands Goldman Sachs cover his legal fees. (DealBook)

Hedge fund skeptics warn on ‘QE Infinity’. (Financial Times)

Goldman’s Blankfein: ‘Gotcha’ culture detrimental to growth. (Deal Journal)

Winton backs China’s first managed futures fund. (MarketWatch)

SSgA skips commodities in new managed futures fund. (InvestmentNews)

San Jose pensions to enlist hedge funds with $730 million. (Bloomberg Businessweek)

People moves

Emily Colella joined Palmer Square Capital Management as a managing director. She will be responsible for institutional business development, according to a news release from Palmer Square. Her previous work experience includes stints at SSI Investment Management, Artisan Partners and Wilshire Associates.

Sutesh Sharma brings ex-Morgan Stanley exec. Andrew Mack to Portman Square Capital as CEO and chief risk officer. (Financial News, via FINalternatives)

Under the Securities Act of 1933, the U.S. Securities and Exchange Commission allows companies to offer securities for sale without having to register those securities or file periodic reports, provided the companies meet exemptions laid out in Regulation D. For hedge funds’ purposes, those securities are limited partnerships. When a hedge fund firm sells its first securities, it is required by Reg D to file a Form D, which includes names and addresses of the company’s executive officers and stock promoters and the date of the first sale in the offering. As such, Form D filings can be a useful tool to find new hedge fund launches.

Lighthouse Commodities Segregated Portfolio, a Segregated Portfolio of Lighthouse Strategies Fund SPC

Lighthouse Commodities Series, a Series of Lighthouse Strategies Fund, LLC

—Compiled by Angela Sormani

Here we take a look at the August 2012 and year-to-date through August performance for the top 5 funds of funds funds, as tracked by Lipper’s hedge fund database. To see more analysis, including assets under management and domicile information for the top 10 funds, click here. To be truly connected to all the Lipper analytics available on HedgeWorld, become a HedgeWorld Premium Plus member. To find out more about how to do that, visit hedgeworld.com/membership/.

What’s news around the hedge fund industry for Tuesday, Sept. 25, 2012:

Around the web

Seattle City Council votes to back Christopher Hansen’s NBA arena plan. (Reuters)

Mason Capital’s complex scheme may backfire, costing it millions. (DealBook)

Crispin Odey’s chickens come home to (a luxury) roost. (The Telegraph)

Easier investor exits at Eric Mindich’s Eton Park Capital Management. (New York Post)

India reviewing 20 hedge fund applications. (FINalternatives)

Fraudster David Mobley avoids prison redux. (FINalternatives)

Petters-linked Arrowhead Capital Management founder James Fry denies new charges. (FINalternatives)

Tiger cubs to host Julian Robertson’s 80th. (AR, via FINalternatives)

Wet Seal opposes Clinton Group’s board plans. (Bloomberg Businessweek)

Asia’s hedge funds find GDP growth doesn’t help returns. (Bloomberg)

SEC must put a stop to casino markets. (Leon Cooperman, Sal Arnuk and Joe Saluzzi in the FT)

State Street appointed by Danish investment firm Maj Invest to support newly launched fund. (Hedgeweek)

Ex-RBC, BofA traders leave Tandem Global Management to start fund at TIG Advisors. (Bloomberg)

Hedge funds play long game for profits. (Financial Times)

People moves

Attalus Capital hired Josh Silva as senior portfolio strategist. Previously Silva was managing director of equity derivatives trading at Credit Suisse in New York, according to a news release from the firm.