Any ideas how I can best useoptions as a hedge in an option portfolio to offset my short vega positions (i.e. butterfly and an iron condor)?
Right now I have a fairly small incomeoption portfolio ($20-30K) and am examining ways to use the VIX either as a hedging tool or perhaps as a trading instrument when IVs jump through the roof. Some had suggested to use VIX ETFs as a way to trade the VIX, but others had suggested they had actually received a lot of flak for inaccurately being able to track the VIX and that VIX futures was the best solution to take a position on the VIX. My question is has any one considered options on the VIX as a way to either hedge or place a bet on it? I know VIX options are a bit skewed in the sense that they price a reversion to a mean volatility level.
Any help would be appreciated.