Friday, 24 February 2017

TVIX, UVXY - first net weekly gain of 2017

Whilst most equity indexes broke new historic highs, the VIX saw a fractional net weekly decline, it was notable that the 2x lev' bullish VIX instruments of TVIX and UVXY saw net weekly gains of 6.1% and 5.9% respectively. However, one positive week does little to offer any realistic hope of near term VIX even in the mid teens.

TVIX, daily

UVXY, daily


First, an update on the VIX, which saw a net weekly decline of -0.2%.

As for TVIX and UVXY...

It was indeed the first net weekly gain of the year. Ironically, that only brings TVIX and UVXY back to levels from two weeks ago.

There is increasing interest in 'VIX protection' - especially for April, and thus whilst front month VIX still closed net lower for the week, the second and further out months are actually a little higher. The underlying problems of futures rollover, and statistical decay make holding such instruments a perpetual nightmare.

The outlook for equities remains outright bullish, and VIX could easily slip back to the 10s... even 9s next week.

*for the record, I have ZERO interest in being long the VIX in the near term.. and that has been the case since last summer.