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ProShares Short VIX Short-Term Futures Message Board

  • judge_smailes8 judge_smailes8 May 29, 2013 3:39 AM Flag

    Contango since the end of March

    The VIX closed at 14.48 on May 28, 2013. The VIX has risen 7.101% so far in May (from 13.52 to 14.48). During this same time period, the Net Asset Value (NAV) of SVXY has risen 2.041% (from 90.3747 to 92.2196).

    During April, the VIX increased 6.457% (from 12.70 to 13.52) and the NAV of SVXY decreased about 2.002% (from 92.2206 to 90.3747).

    Since the market close on March 29, 2013, the VIX has increased 14.0157% (from 12.70 to 14.48) and the NAV of SVXY has decreased just 0.00108% (from 92.2206 to 92.2196).

    I know that many of us are frustrated because SVXY hasn't increased since the end of March. However, the fact that SVXY is at approximately the same value as it was at the end of March is actually not such a bad thing seeing as how the VIX has increased 14% during the same time period. Obviously contango is the reason why SVXY hasn't dropped 14% during the same time period. If the VIX plummets to 12 again, maybe SVXY will approach 110?

    Sentiment: Strong Buy

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    • This thing is just a wonderful investment, judge. I continue to believe it will average 100% per year in decent times. Factor in some market corrections and I still feel the long term average, including everything, is 50% per year. That means this will double every other year, and in 10 years should increase 30 fold in value.

      Another option like you said is shorting TZA or TWM. I pulled up a 5 year chart, VXX is down 99% and TWM is down 92%, so if you're looking at a long term investment, that 7% difference doesn't mean much.

      What I am thinking about doing is putting 25% of my portfolio in SVXY. In my opinion, even keeping the other 75% in cash you're looking at 700% total return on your money in 10 years. What do you think? How are you playing this thing, is it a small position for you, or a big one (10% or more)? What's your overall portfolio mix right now? I continue to believe stocks are very overpriced, but the built in tailwind for SVXY is big.

      One thing to be aware of is if you read the prospectus for XIV, which mirrors SVXY, it says it will decline to 0 long term. Not sure why they say this, maybe just to avoid lawsuits.

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