Unlike most underlyings, UVXY’s price is derived from the price changes in VIX futures (/VX). This is often confusing to traders that are accustomed to supply and demand factors to arrive at an agreed upon price by buyers and sellers. The formula is straightforward and relatively easy to calculate using the following inputs:: UVXY’s previous […]
Calculating UVXY’s Price Read More »
Shorting requires a holder shares to allow them to be lent (in exchange for a borrowing fee) to others. UVXY, along with other levered ETFs are commonly listed as ‘Hard to Borrow’ (HTB) with few, and sometimes none available for lend. Many brokers, such as TD Ameritrade, offer a Hard To Borrow program that gives
No Shares To Short Read More »
Drawdowns are part of trading so it is critical to keep your emotions in check to avoid the common pitfalls that follow. Angry trades, hope and pray, throwing good money after bad are all mistakes we have to learn not to commit if we are to have any chance at long term success. I’d like
Drawdowns and Losing Trades Read More »
A favorite boogieman to many traders, Market Makers are an indispensable ingredient that ensures liquidity, without which we’d not enjoy the fills we get each day. One of my early strategies involved selling vertical Call spreads on the opening day of a new weekly option expiration. Often I’d be the only volume on that series.
(And from $40 to $2,400,000,000) After backing out UVXY’s 10 reverse splits, the initial price at inception now stands at $2,4000,000,000 per share and that value will only increase with subsequent reverse splits. If UVXY started at $40 in 2011 and is now worth .00000067, would it be possible that I could have made some
Shorting from $2.4 billion to $10 Read More »
I’ve heard this many times as an argument to try to pick apart a naked option selling strategy, but it’s simply not the case. First there are the basic principles of commerce at play here. If you were in the business of selling something, how long would you be able to stay in business if
A standard 10 year chart of UVXY tells quite the story. Change the display to logarithmic and the story changes. Standard charts display changes in terms absolute values. If you start with a $100,000 short in UVXY in 2011, this standard chart would show you your profit and loss from that initial trade. Notice that
Log Style Charting Read More »
Every shorter of volatility has asked at one time or another if there is an effective way to hedge their position, and despite years of searching, discussing, testing, I’ve concluded that there is not for some basic reasons Hedges are an insurance policy to protect something else, and a hedge would be considered viable if
Hedging – A beta Perspective Read More »
On my live screen I always have the following charts up: UVXY, /ES, VIX, /VX M1, and /VX M2. This gives me a complete picture as to the inputs for my trading. I’ll often include /CL and /ZN as checks on /ES movement to see if it’s a macro event or just a selected equity
Chart Watching for Relationships Read More »
UVXY is an exchange traded product from ProShares that is based purely on a calculation, which unlike other traded underlyings is not affected by direct supply and demand forces UVXY’s price is governed by a single effect; the percent change in a combination of front and second month VX futures on a daily basis. It’s