Jet Black said:
I've asked this before, but UVXY is currently trading at $12.30ish. If it drops to the $10-$11 range, would buying and waiting for someone to do something stupid be a good move?
I've followed and traded UVXY some but I am not expert so hopefully if I am wrong here some of the more experienced guys will jump in.
UVXY will always have some downward pressure on it to trail to zero.
Much like options do as they get closer to expiration but more gradual.
Expect to see a reverse split in the coming months as it gets down this low.
I could be very wrong on this next part.
From my observations the more intense the volatility the more UVXY rises.
On a gradual rise in VIX over a long period it will rise at about the same rate or sometimes less.
If there is a sharp spike in volatility it rises at a much higher rate than VIX.
If volatility happens after hours it will still rise some but not at the same rate it would during active trading hours.
So my general advice on UVXY is timing is everything and it is great if you can get in early on those panic selling days. We never know what the next catalyst will be, but I am keeping up with the Ukraine/Russia war and if I see a major escalation trigger I'll buy back in then.
EDIT
after hours example right now
VIX up 3.39%
UVXY up 2.43%
One other note - the reverse holds true as well.
The faster VIX falls, UVXY will fall at an even faster rate.