UVXY why is it down

tracer619 · Sep 24, 2012

ok, help me understand something.

The Market is down pretty big today. UVXY is down also....
Why?

I dont have a position in this btw. How low can it go? And why?

blackguard

nazzdack · Sep 24, 2012

Quote from tracer619:
----help me understand something.
----Market is down.....
----UVXY is down also....
----Why?
----How low can it go?
----why?

1) The market is "down" but not very much. It opened near it's low and rallied somewhat.

2) That can be indicative of short-covering and aggressive put-selling which can pressure VIX indices even when the underlying is trading lower. :mad:

3) "It" can go lower than you expect it to. :eek:
4) The correlation, at best, is "only" ~-80% according to the CBOE.

tracer619 · Sep 24, 2012

last week I was thinking of averaging in to a position.
glad I didnt.

your point #3 helps a lot.

now Im thinking it goes to 15.0 or so. maybe lower

blackguard

tracer619 · Nov 20, 2012

another yearly low today- 21.89

how low can it go....?

nazzdack · Nov 21, 2012

Quote from tracer619:
----another yearly low today....
---- 21.89
----how low can it go?

1) You're back!

2) "It" ought to drift lower atleast until January 2nd, 2013.

3) It may "perk up" then if the new year gets off to a "bad" start. :eek:

loufah · Nov 21, 2012

Are you buying UVXY because you want to make money when the market goes down? If so, why not buy puts on SPY?

If you're buying UVXY because you saw it go down so much and expect it to "bounce back" - do you know how UVXY is computed?

tracer619 · Nov 27, 2012

Quote from loufah:

Are you buying UVXY because you want to make money when the market goes down? If so, why not buy puts on SPY?

Im looking for a point to start averaging in and yes I want to own it as the Market goes down (VIX goes higher).

I do not know how its computed. Yesterday the VIX was up slightly while UVXY was down about a point.

Why the difference yesterday?

How exactly is it computed?
Why dont arbs take advantage of the disparity as they do with other closely correlated instruments for example SPY and ES?

If anyone can explain I would appreciate it.

Jgills · Nov 27, 2012

Quote from tracer619:

Im looking for a point to start averaging in and yes I want to own it as the Market goes down (VIX goes higher).

please dont do this. uvxy isn't something to be held for a long period of time and has a ton of daily decay. there are much, MUCH more efficient ways to take a short view on the market.

tracer619 · Nov 27, 2012

Quote from nazzdack:

1) You're back!
2) "It" ought to drift lower atleast until January 2nd, 2013.
3) It may "perk up" then if the new year gets off to a "bad" start. :eek:

I was thinking of starting to average in around Dec 15. Then Buying every 10 trading days or so from then on until the Market goes down and the VIX spikes.

In case you didnt see my other post, why yesterday was the VIX slightly up while UVXY itself was down almost a point?

Shouldnt they move in the same direction?

Jgills · Nov 27, 2012

Quote from tracer619:

I was thinking of starting to average in around Dec 15. Then Buying every 10 trading days or so from then on until the Market goes down and the VIX spikes.

In case you didnt see my other post, why yesterday was the VIX slightly up while UVXY itself was down almost a point?

Shouldnt they move in the same direction?

i can give you the answer... but you'll never learn unless you figure it out yourself.

1) figure out what exposure you have when you're long UVXY
2) look at what those products did yesterday
3) be happy you now know the answer