People were waiting for the VIX to turn last week when it first hit the 12s.
Sure enough, it started rising this week (check the historical prices), until FRiday when it crashed again.
I do not see problems until we approach March.
Also- be careful to look at contango. It actually increased to almost 11% and with vix futures expiring on February 12th, if spot vix stays constant (IF), then UVXY will drop approximately 20% from here.
Ralph - Excellent. I never read your past posts. But I admire and share everything you posted. I am generally long the market and short UVXY and long SVXY. And occasionally buy VIX calls in times of crisis (last fiscal cliff for example).
What do you think of a collar synthetic short position with back spread ratio - sell 2 Jan 15 UVXY 30 calls and buy 1 Jan 15 10 puts .. Even in crisis I don't see UVXY ever going over 30. So, the calls sold must be fairly safe and if a crisis ever boils one can always protect going long UVXY at that time. And Jan 15 10 puts should be solidly in the money as this decays at 90% per annum on average. Thoughts?
One thing I noticed you didn't mention was that 2nd month (March) future is 20% above spot... Usually is around 15% above spot and once it becomes front month, it's usually converges to no more than 10% above spot... At the same time, traders may be anticipating volatility in March and keep the March futures elevated, but we should see some convergence...
Wow! I don't know if you read one of my former posts, but I agree with you entirely. Spot on! Great analysis! Next week will be a very light week on the economic front. Not much data being released, so I'm thinking we'll see some follow through buying on Monday, or perhaps test and bounce off of 1510...
PS. High contango is the reason why UVXY hasn't made new lows, but as Ralph said, it's the reason why UVXY can drop another 20% in two weeks...
so my question to YOU is:
is better to buy VIX calls then this ETN(TVIX)(VXX)?
or maybe just better to buy S&P puts for April as there was a HEAVY buyer yesterday
Transports still chugging higher- Thought it was to break down !