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ProShares Ultra VIX Short-Term Futures Message Board

  • jdrobinson81 jdrobinson81 Aug 19, 2012 1:10 AM Flag

    Shorts Could be In Peril; Contango Not Well Understood

    The relative performance level of VIX to VXV (VIX:VXV in stockcharts) is at the lowest level in 5 years and nearly the same as March 2012, before a 100% rally in UVXY. This proves that contango does not always result in lower UVXY prices, in fact, when this extreme contango happened in March it was a GREAT time to buy volatility.

    Past may not repeat...but it probably will. Big rally coming in volatility probably in September and October which are some of the seasonally weakest months of the year, even in election years. The fireworks may not come till Labor Day, but something will kick this off.

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    • Could we see your credentials or you're just like other nobody's, a clueless monkey trying to justify a losing position?

      • 2 Replies to jbl2224
      • "What Are Your Credentials??? LOL !!!! What are you? an Obamabot? Nazicrat? EuroSocialista?
        "Show Me Your Papers!" hahahaha!!...

        Do we need "Credentials" to post on a message board ? OMG!
        That is hilarious

        you reveal


      • robinson, let me expound on your point.
        yes indeed, contango is not only misunderstood,
        it is also overrated.
        let me make an example. put contango aside
        for a moment.
        Only think about Sept contracts and price
        paid for them by this etf. ok. Now, only
        think about this etf selling those Sept
        contracts at higher prices than it paid
        for them. That is called backwardation.
        You don't even need backwardation, however
        possible, for UVXY to go up. All you need is
        a higher price as it unwinds the contracts
        to the previous day.
        Also, contango is seen by some as an immediate
        loss, but it is not. There are no losses on
        held contracts until they are unwound.
        If TSHTF, UVXY could be selling not only
        the Septs for a profit, but also the Octs
        for a profit. That would result in a strong,
        steady rise lasting many weeks. Compounding.
        But remember, in order to just have 1-2-3
        day profitable runs, UVXY doesn't even need
        that, all it needs is rising Spot.

    • Latest Barrons out today agrees---says historic buying opp in vol. Could see $20+ UVXY by October, if not Sept.

    • Extreme contango being what, extreme 'steepness' in futures for the next few months?

      Or a reduction in 'steepness' will cause less contango or move into a backward direction and therefore cause UVXY to rise?

      Are you implying that there is a large tidalwave in the futures which is foretelling a big crash?

      If I charted VIX against VXV then what, a big gap which closes while UVXY rockets?

      • 1 Reply to in2your4brain
      • I appreciate your ratio chart.

        I observe that:
        - smaller drops in S&P occur before bigger drops,
        - very low ratio drops do not always correspond to a small S&P drop and
        - very low ratio drops never corresponded to a large S&P drop.

        I wonder if the difference between these two futures or some other formula would be better than the ratio in finding the 'hot' spot to buy UVXY.

        As for steepness, I am referring to the rate in change in the futures over each of the 3 months.

        I'm sure the 'big-guns' have it all figured out with big red-short and green-long buttons.

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