Friday, 27 May 2016

TVIX, UVXY - a fourth net weekly decline

With US equity indexes seeing a significant net weekly gain, the VIX remained very subdued. The 2x lev' bullish instruments of TVIX and UVXY saw a fourth consecutive net weekly decline, decaying by -19.2% and -19.6% respectively.

TVIX, daily

UVXY, daily


*first, an update on the VIX, which saw a net weekly decline of -13.7%

As for TVIX and UVXY, whilst the VIX remains stuck in the mid/low teens, the underlying issue of decay is causing serious problems for those holding across multiple weeks.

The month of June does offer VERY high threat of renewed equity downside (if only to the mid sp'1900s), with an associated spike in volatility.

On any basis, the VIX remains on the very low end of the cycle, and so TVIX/UVXY have a fair chance of sig' upside across the coming month.

Long term of course, both will see further reverse splits.. as is inevitable for almost all leveraged instruments.