Friday, 13 September 2013

TVIX, UVXY - a brutal week for volatility bulls

With equities rallying across the week, the VIX slipped over 10%. The 2x VIX bullish instruments of TVIX and UVXY both saw weekly declines of around 19%. If Mr Market can cope with the FOMC next week, the VIX will remain low for some weeks..perhaps months.

TVIX, daily

UVXY, daily


First an update on the VIX weekly chart...

A very significant drop of around 10% for the VIX this week, which matches the equity indexes that  generally gained around 2%.

*Yours truly was long VIX last Friday from 15.50, and bailed in the low 14s. Considering the equity weekly charts, I'm resigned to further equity gains for some weeks, perhaps months, and in that case..long-VIX is simply no longer a valid trade.

Equity bears had their chance....and failed.

For the TVIX/UVXY holders who did not get stopped out earlier this week, the weekly declines of around 19% are indeed brutal.

A simple reminder of the decay issue...

UVXY, weekly

Hell, UVXY even started its life with a weekly black-fail candle.

As ever...such leveraged instruments are for short term holds only, a week or two at most, arguably days....if not mere 'hours at a time'.