Friday, 24 October 2014

TVIX, UVXY - naturally on the slide

With VIX seeing a net weekly decline of -26.4%, the bullish VIX instruments were badly impacted. TVIX and UVXY saw net weekly declines of  -27.5% and -28.4% respectively. Near term outlook is for minor chop ahead of the next FOMC.. before renewed upside.

TVIX, daily

UVXY, daily


*first, an update on the VIX, weekly


The TVIX/UVXY holders had plenty of warning last week, with TWO black-fail daily candles. The two stocks are lower by around 45% since the highs... and it is another reminder of just how dynamic these instruments can be.

Best guess... VIX to floor in the 15/14s next week... before another major equity wave lower.

If VIX explodes into the 40s.. then TVIX/UVXY will increase in value by a factor of 3-4 times.

As ever though, such instruments are for short term trading only, not least because of the inherent 'statistical decay' problem.