Shorting UVXY

D

dcwriter2

This is a popular and with a couple caveats successful long term trade for many, as inevitably it reverse splits every year or two, even now that it’s at 1.5 volatility instead of 2. All that staid, I wonder if it’s a good idea never to close the trade, even after one, or two reverse splits. The idea would be to let it slowly dissolve, and avoiding closing, which is a taxable event. Of course all the other short risks exist, getting called away, for exampl4, could negate this but I was just wonder if instead of closing a short UVXY position just letting it run.
 
That’s what Seth Golden is doing. He always has a portion of portfolio sitting in long-term UVXY shorts. Then adds to those as needed.
 
Ok, I guess what I am wondering is, theoretically, could one say short 100 shares of UVXY and never voluntarily cover and, unless called away, never pay capital gains?
 
dcwriter2 said:
This is a popular and with a couple caveats successful long term trade for many, as inevitably it reverse splits every year or two, even now that it’s at 1.5 volatility instead of 2. All that staid, I wonder if it’s a good idea never to close the trade, even after one, or two reverse splits. The idea would be to let it slowly dissolve, and avoiding closing, which is a taxable event. Of course all the other short risks exist, getting called away, for exampl4, could negate this but I was just wonder if instead of closing a short UVXY position just letting it run.
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Make sure you hedge otherwise this could happen: https://www.marketwatch.com/story/x...rs-of-work-and-other-peoples-money-2018-02-06 XIV was the same type of instrument as UVXY.
 
TheBigShort said:
UVXY went up 1300% in March. How much of your capital could you allocate to this strategy without being forced to cover at the highs?
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10, maybe 20 percent with a far out of the money short call as a black swan/disaster hedge.
 
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