Monday, 4 January 2016

TVIX, UVXY - strong gains to begin the year

With US equities closing severely lower, the VIX was naturally screaming higher, back above the key 20 threshold. The 2x lev' bullish VIX instruments of TVIX and UVXY settled with sig' net daily gains of 10.4% and 10.9% respectively. Near term outlook offers higher levels in volatility.

TVIX, daily

UVXY, daily


*the closing hour saw equities spike into the close, and that sure cooled the VIX, resulting in TVIX/UVXY losing around half of the gains from 3pm.


TVIX loses half the gains in the closing hour

Suffice to add, the third net daily gain for the VIX instruments, and considering the broader equity outlook, it would seem the VIX will indeed continue to push higher across the next few days.

VIX 30 is a viable target, and that would likely equate to a further 35/45% upside in TVIX/UVXY.

As ever though... such instruments are for very short term holds only.

Even if the broader market cools all the way to the sp'1600/1500s this late spring/summer, higher volatility in itself will only increase the problem of 'statistical decay'.

*I have no position in the VIX, but with the Dec' equity close, I will consider trading VIX again in the weeks ahead.