I'm not an expert in this type of ETF, I only started trading it in Jan 2013. UVXY is pegged off from the VIX. The VIX is calculated in real time based on futures and options. It's too complicated for me to understand completely. I have made lots of money trading it so far but I wouldn't want to buy and hold until I understand more about it. From what I heard, VIX goes up when there are uncertainties in the market. Some people call it "fear" trading but it's more about hedging. When there are uncertainties, people tends to buy options to hedge against their long positions.
This is an instrument of wealth destruction. Stay away! If you really want to play it...watch it for a month before you trade and bet only in small doses. Never go long more than a day and short the pops. If you want more info...look at the charts and read the prospectus.