Since its 2011 inception, UVXY has had 8 spikes over 100%. Below are the months and degree of each peak As of April 2023, UVXY has been trading for 11.5 years with 8 major spikes. This averages out to a major spike every 1.44 years or once every 17.25 months.
UVXY Spike History Read More »
One of the most common inquiries I receive from UVXY traders is asking for advice to help out with mounting losses stemming from a long entry. They typically go something like this: “My average price is $10 but it’s now trading at $6. What should I do?” Bagholding refers to a losing position that has
The obvious risk in shorting UVXY and other vol ETNs is the ever-present threat of a large spike that can wipe out a trader’s account. In studying the historical price gyrations, one can assemble broad probabilities for the frequency and degree of these spikes. Assumptions In conducting this study I had to define the parameters
UVXY Spike Cadence Read More »
This concept arose from the need to demonstrate my defense mechanics for a client during a coaching week in 2021 when there was little UVXY action to use for this purpose. The general idea was to open a trade that had a high probability of moving against me, forcing me to address the red ink.
Contango is undoubtedly the prime factor in determining UVXY’s price path, but there are many misconceptions about how this works and its true impact. Many postulate that since the daily roll happens at the end of the trading day, simply being long or short the shares before and then closing the trade after will net
How Contango Crushes UVXY Read More »
The downward history of UVXY can be attributed to three main factors; using a benchmark derived from futures in contango, beta slippage, and the reverting nature of volatility itself. Contango is the main driver of UVXY’s downside price path over the longer term. The daily roll from front month contract to second month contract, where
UVXY Decay Factors Read More »
The high cost to carry a long volatility position is one of the decay factors used by shorts to generate profits. Looking at a long term chart makes it obvious that the longer you hold a short, the higher the probability of profit. This decay serves as a backstop by product design, helping to ensure
Duration is your hedge Read More »
While most traders recognize the slow dependable grind lower of UVXY’s price, they would rather take a buy low, sell high, limited risk trade with long shares or options. While most of the UVXY longs I’ve interacted with on Twitter have net losses, those that win often choose one of these methods: Going long an
How to go long UVXY Read More »
I completely understand the lure of going long UVXY. By design it’s a loaded gun ready to explode with market crashes. What’s not to like about the chance to make 5, 10, even 100 times your money on a quick trade? Just buy some out of the money Calls just before the crash and retire
UVXY Spikes are Sexy Read More »
Many traders with spread trades that are going against them ask if there is a way to hedge their position. Let’s first look at the mess they’ve gotten themselves into and then possible solutions. Step one; You have a bias or trade plan that is starting to fail. Lets assume you collected $1 on a
How Can I Hedge a Spread Read More »