Monday, 31 December 2012

TVIX, UVXY - year end massacre

With the VIX closing down 20%, the 2x leveraged bullish VIX instruments got nuked. TVIX and UVXY declined by 24% and 25% respectively, which were the largest declines since late March, on very heavy volume.

TVIX, daily

UVXY, daily

VIX, daily


As is always the case, when the VIX gets toppy, when it does start to fall, the smack down can be beyond fierce. Today was nothing less than a massacre.

For those not using good stops, today was a truly awful way to end the year.

Both instruments today lost around two thirds of the gains that took 7 trading days to build.

If I'm right about the indexes declining to the low sp'1200s in early 2013 - with VIX 35/45, then both of these instruments will see amazing gains..but such gains..will not hold for long.

The inherent decay in such leveraged ETNs will easily see to that.