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ProShares Ultra VIX Short-Term Futures Message Board

  • ralphjlindblom ralphjlindblom Aug 25, 2012 10:08 AM Flag

    Ninja/ Wats/ Pandy/ Others

    I wanted to give you my insight over a long term period for this ETF (3 weeks-LOL)

    This week- we have Jackson Hole coming up at the end of the week. Expect positive comments coming out from Bernanke and Drauchi, even if there is no concrete steps taken. I expect the market to be flat to slightly up this week.

    ECB meeting, German Parliamnet & other European news (mid September)- I expect positive news on this front.

    VIX Pricing- right now the front end month is high compared to spot VIX. It has been tracking at about a $2 difference and now it is at a $3.37 difference. If spot VIX just stays where it is (Could go lower because of Jackson Hole) and we go back to a normal $2 difference between Spot VIX and September VIX, this ETF would be priced around $4.40.

    So, next week while there may be some trading opportunities along the way, I believe that we will be in the mid 4's (or possible lower if we get very good news from Jackson Hole) by the end of next week.

    Good luck to you all.

    Ralph

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    • ralph: Appreciate the assessment. Remember, for me this is a cycle trade and part of a trade setup. So, barring a RS, I'm holding.

      Regarding Jackson Hole. I don't think they will do anything. They seem to get better results from just talking about doing something. To the contrary, once they implement it, the jig is up. I still feel it is the hype (and hope) of QE3 that is moving the market. Additionally, I feel that QE3 is also priced in. There are no buyers at this level. As for volatility, well, the level it is now suggests nobody expects the market to go up any time soon. VIX is too low to suggest an up move or a down move right at the moment. Therefore, with the market still looking topped, a downside move would be more likely without some major economic turnaround. QE3, while it may offer hope, really has no chance of fixing the economy. How much did QE1 & 2 actually help the economy? The only thing they really helped were the market.

      Right now, probably the worst thing they can do is actually implement another round of QE. And until then, volume will decrease as the market goes up. In the meantime, yes, UVXY could continue down, although not actually a given. But I can hedge with XIV or SPY calls and make more in a few days than what my losses will be in UVXY if it does go down to $4.50.

      Also, S&P set a 52-wk intraday high last week, but didn't actually close anywhere near it. Closing price is what matters and it hasn't closed there yet, but it certainly could. I like the SPY gap that needs filled in conjunction with its proximity to the 1346 Bull/Bear Line on the Futes.

      Thanks and have a good weekend.

      • 1 Reply to watsituyah
      • Wats:

        I know this is a cycle trade for you and you do your own hedges.

        I agree with you that QE does not solve the issue, but the more talk we have of this, the higher the market can go, or sustain its high.

        With the talk of more QE, the Fed meeting in September, the ECB/ German and European decisions due, with front end VIX being alot higher than spot VIX, this has the possibility to drop this ETF to mid 4's.

        Will it be a straight line? NO. I believe people who are long can make money on Monday and Tuesday during the trading day, but I see next weeks price (close at Friday) in the mid 4's.

        Remember I am an option player and have alot of $5 puts bought at 0.55 (for disclosure purposes). So, therefore a drop down in the price will benefit me.

        Have a great weekend.

    • jondow69@ymail.com jondow69 Aug 25, 2012 11:05 AM Flag

      hey ralph, how's chris evert BLVD? any way, you're probably right, for UVXY to get a massive spike, it needs a blood bath in the S&P, i mean a down ward drive like 20-30pts a day for a 2 week period, as soon as the pressure stabalizes UVXY continues its natural down ward patter. to me this is a very difficult etf to trade even interday, it's like so computer controlled, and to make money you need pure luck. i really feel long term holders of UVXY become addicted to this product, and can't let go. sad. JMO

      • 1 Reply to jondow69
      • Jon:

        Key Biscayne is a beautiful area and the tennis is great.

        This ETF does create alot of trading opportunities.Have to be experienced in trading this ETF (not regular stocks) to pick out the opportunites (no guarantees though!!!)

        As far as the long term longs, some got into this product not knowing what it truely was. Others expected a market crash or a large increase in volitality (and still do) that did not come and contango is destroying their capital every month. Others use it wisely as a hedge against their total portfolio (as an example, if based on my age I should be in a balanced portfolio- 60% stocks 40% bonds, I may hope that the market goes up so I increase my stock holdings to 80%, buy 15% bonds and 5% long term this ETF. Thus, even if I lose this investemnt, my equities make more than what I lost).

        Since there are many different possibilities, I would not generalize about other peoples investment decisions.

        Good luck to you.

    • Thanks, Ralphie. Your track record is better than mine. I guess I keep expecting sanity! I think you're probably right about the upcoming week, barring an unexpected "event", but I don't expect positive news from the ECB mid-September. Could be just for that reason we get a surprise.

      While Bernanke and Draghi may pay the predictable lip service in Jackson Hole, I don't expect announcements of any actions...and have to wonder how long the markets will be led around by their.....um....noses.

      Here's an interesting article re: the FOMC and QE where I have left a comment:

      http://www.ritholtz.com/blog/2012/08/the-fomc-minutes-qe3/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

      • 1 Reply to pandorabelle
      • Pandi:

        I understand about what you are expecting, but there is a long time saying of "Don't fight the Fed".

        When you have the FED, ECB, China pumping money into the system, there is only one way the market can go. As an investor, I feel much safer being on their side, verses the other side.

        Now, if they ever stop all this quantative easing, then the real econmic events play out and I would totally be on your side.

        So, even if their is no concrete action taken this week/weekend, a strong message to the market will make it rise. You have the FED meeting in September and European meetings and German decision in September also. While this may create a little uncertainity after this week (until the meetings play out), for this week I see the market advancing and UVXY dropping.

        Therefore, I may decide to sell my puts at the end of this week (if they are in the mid 4's) and wait until the dust settles after the September meetings to initiate any new trades.

        Best to you.

    • Thanks...expect a slightly flat week with a retest near 1425 upon which I hope to get some near 4.70

      Then expect a sell off on the news and hold this for about 2 weeks with perhaps a brief index spike.

 
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