Friday 21 November 2014

TVIX, UVXY - VIX instruments in decay mode

With the broader equity market breaking new highs, the VIX remains subdued. The 2x bullish lev' instruments of TVIX and UVXY are merely decaying, seeing net weekly declines of -4.4% and -5.6% respectively. Outlook into early 2015... further declines.


TVIX, daily


UVXY, daily


Summary

*first, an update on the VIX, weekly


There is the threat of a brief spike to 18/20 before year end, but with continued action from the central banks (not least China and the ECB today)... the risk of an upside VIX spike remains low.
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As for the VIX instruments of TVIX and UVXY, both are simply back to the usual price action of the last few years.. on a slow.. but gradual decline.. due to the usual 'statistical decay'.

Considering the broader equity market, I have ZERO intention to be long VIX in any manner for some months.. and indeed, the last VIX position I took was summer 2013.
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*with TVIX set to lose the $2s.. another reverse split looks due within the next month or two