Friday, 23 May 2014

TVIX, UVXY - now is still not the time

With equities holding the sp'1860s, and rebounding into the weekly close, the VIX resumed the decline. The 2x lev' bullish instruments of TVIX & UVXY saw net weekly declines of -9.0% and -8.8% respectively. Near term outlook is for continued decay, not least if the VIX slips to the 10s...or even 9s.

TVIX, daily

UVXY, daily


*first, an update on the VIX, which saw a net weekly decline of -8.7%.

VIX is now close to levels not seen since February 2007. VIX 10s look likely with sp'1910/20s, the only issue is whether single digit VIX is seen before the current multi-week equity wave completes.

As for the 2x lev' instruments, as well as reflecting a lower VIX, we're just seeing the usual statistical decay.

As ever, such instruments are for the short term, if not merely 'intraday' holds.

There will no doubt come a time this year when these instruments will double up..or even more..but they will almost certainly not recover to levels from just a few months ago.

*I currently have no intention to be long the VIX until at least mid June. My own preference would be to pick up a VIX call block..strike, Sept/Oct, in the low 20s.