"We need a class action lawsuit. I have lost about 9000.00 on this trading in and out of it. Today I had hoped to recoup some losses. Bought 10,000 shares this morning at 6.00 expecting a bounce to 7.00. Instead it closes down while the market is way down!!! This us BS!!!!"
You've lost money because you bought an instrument that you clearly do not understand.
The general market went down but 95% of today's price mvmt of TVIX was based upon the price action of Aug VIX futures. They were unchanged today.
July VIX futures expire with the SOQ tomorrow morning.
As I type those Aug futures are up 2%. If those numbers are unchanged at market open, TVIX will open up 4%.
"Does UGAZ decay over time?"
Of course. It suffers both from contango and the enhanced beta decay of triple leverage...
". If you are going 6 months out where it is trading at today, what kind of a price point do you pick? Like maybe $30/$15 put spread, or do you go out of the money? Thanks in advance"
Hey, bull, I just posted a long screed on the SVXY board but it keeps getting deleted here.
I buy OOM. Currently own Jan 20/15 UVXY puts purchased last month at $2.20 debit. I give it a 75% Prob of finishing ITM as outlined in SVXY note.
March 2016 options have just listed; I'll be pouring over those soon. There are no great bargains in Jan 2017 leaps but there are excellent payouts for SVXY leaps. However, as we have seen in past 12 months, volatility of volatility can wipe out all gains. I can safely predict future ranges for UVXY/TVIX, but not SVXY.
In regards to high premiums: yes, you are paying high premiums for your long puts but, with option spreads, you collect those same obscene premiums on the contracts that you sell!!!
Play the dark side,
Hey, Joey, hope all is well!!!
"and my mind is shot"
Most of us should have a mind as shot as yours at your "old" age, whatever that might be. !!!
"I'm sure you've heard this before but you should become a money manager. Two things: 1) some would say you "owe" others your expertise since you can improve their lives. Second, from your viewpoint- they returns are the best of all time. "
Thanks, Bob. Actually, I've just had a great 3 year run since stumbling upon these VIX proxies: great math but also great luck
I'm a physician. I did "owe" that other expertise and, hopefully, I have improved the lives of many.
And, Bob, there is a HUGE difference between managing your own money versus OPM, other people's money.
Play the dark side but stay hedged,
"Just wondering any chance you could give a little color on how you pick a UVXY spread. Right now it is 27.50, I see the January 20/15 put spread could be bought for 2.50 for 100% gain. Heck UVXY could be 50 cents by then if the VIX for example would go down to 6 or 7"
First, Wu, one must make assumptions and assign probabilities to outcomes.
There is .0001% chance of the VIX dropping to 7, IMO.
There is ~95% chance that VXX will be lower in 6 months than it is today and ~95% chance that beta decay will exceed 2%/month.
next use the formula for exponential decay V(t) = V(0) * e^(k*t)
e = Euler's constant
k = monthly decay, expressed as a negative number. (pos number for exponential growth)
t = number of time units, in this case months
plug 27.5* e^(-.12) into Google and the result is 24.4
I would predict with 90% certainty that UVXY will be no higher than 24.4 by Jan expiry.
Now adjust your assumptions and assign probabilities:
Where will M2 be at expiry?
Will average monthly beta decay be 2, 3, or 4%?
What will average monthly contango be?
Now allow k= -(beta decay + contango*2) and adjust results for 2*percentage change in M2 during time period t
check payouts for various spreads and purchase spread where benefit exceeds risk.
Personally, I bot a handful of those Jan 20/15 spreads in June for 2.20. I think that there is ~75 % chance that this spread will finish ITM. For example UVXY will decay to 15 if M2 closes at 14.5, beta decay is 2% and contango is 4%/month. Will also decay to 15 if the M2 rises to 15.5, monthly beta decay is 3% and contango averages 5%.
Probabilties that I assign are purely subjective on my part.
If there is a VIX spike in mid Jan, this spread will more likely expire worthless.
But, Wu, whatever you do you should dabble small amounts.
PS: I find poor relatively poor returns for Jan 2017 leaps. And I just noted that March 2016 options have just listed...
We should both be lucky enough to build $5M portfolios and exit the game!!!
"Wow Bustin- 85%! Phenomenal! If I could make about 100% per year for 10 years, as you seem to be doing, my 80K would be worth close to 100 million, though admittedly I would sell when I got to 5 million or so and get out of the markets forever. "
I am saddened you read of your mkt losses. It appears that PGN was a real dog. Sadly you practiced poor market discipline and risk mgmt and failed to exit a losing trade.
The keys to making money trading volatilty include thorough understanding of contango and futures markets, thorough understanding of how these ETPs work, and thorough understanding of the VIX futures curve which is best demonstrated at VixCentral. And, of course, hedging and portfolio risk management.
And you shouldn't dabble with options unless you understand them as well.
I wrote a piece on iHub over a year ago regarding self education. Google "VIX proxy primer". There are 2 parts.
Currently my portfolio is
10% short TVIX and UVXY,
30% a large assortment of SVXY call spreads and UVXY put spreads with expiry of SVXY extending out to Jan 2017. I'm 10% partially hedged with SVXY put, VXX call spreads, and UVXY covered puts. Each spread has a minimum 100% max payout per 6 months. Max loss of each spread is 100% of premium paid.
My winning trades far exceed those that expire worthless.
20% long term call spreads of favorite companies (ILMN, REGN, SYK, DIS, MTD, SBUX)
20% double short 3x leveraged ETF pairs that are market neutral. These are also a source of cash if needed.
My VIX trades are up over 100% this year and my total portfolio is up 85% YTD.
Best to you,
Thanks, Bull, i'm going to study your approach.
I also believe that the best play with UVXY is buying debit spreads expiring 6 months out with the exception of a closer expiry during a VIX spike where I can often harvest a 100-200% spread return in a very short time frame.
I no longer short new positions of UVXY because HTB rate has grown to 17% with Fido. However, I do sell weekly or monthly puts against that position. I continue to add to my TVIX short monthly since March 2013.
Best to you,
PS: Those adjusted options can get very confusing...
Having another great year with the VIX ETPs. However, I'm mainly buying long dated SVXY debit spreads and UVXY PUT spreads 6 months out. I have some SVXY ATM leap calls against which I sell weekly or monthly OOM calls whenever the VIX plummets as is the current situation.
Furthermore HTB rates have dropped significantly on many leveraged ETPs (excepting UVXY) and now double shorting triple leveraged pairs with nontrending volatile underlying indices has been a very lucrative play to capture enormous beta decay (volatility drag). UGAZ/DGAZ is working particularly well at present. NUGT/DUST and JNUG/JDST have been huge winners this year...
This month's VIX "cycle" was addicting and lucrative but, imo, played out until Wednesday morning. Then we should begin the August expiry cycle with a healthy 10% contango.
Good trading everyone but stay hedged!
At what stages do these comments appear?
"MARK THIS POST!!! TVIX will triple within 1 month."
"TVIX is a SCAM SCAM SCAM!!!"
"TVIX is forming a Double Doji Inverse Candlestick formation."
"Short squeeze coming!!!"
And I would like to add
Stage 5: TVIX roadkill!
I first shorted TVIX in March 2013 at a $4.15. There have been two 1:10 reverse splits since then so my cost adjusted basis is $415!!
I have added to my short position monthly...
I posted on iHub a year or so ago a study guide for these VIX ETPs.
Educate yourself by googling "vix proxy primer"; there are 2 parts.
The only pertinent chart for this derivative is the one found at vixcentral.
Just play the dark side,
"This stock is a scam. Find me a stock that will drop over 50% every month for last 5 years and still operating."
If this "stock" has better earnings and declares a dividend, it might just go to da moon.
Then, again, perhaps you might read the prospectus. Scam to you; my daughter's college fund for me!
Just play the dark side,
"hey Ralph how have you been? I was wondering when you guys would show back up. The name of the other fellow escapes me at the moment."
I guess that would be me. ;-0.
I hope you guys are well.
I got frustrated posting here: between the trolls and a 40% rate of yahoo deleting my messages due to assumed links, illegal characters, etc...
I posted a while on iHub as DrContango but gave up when the message board was coopted by daytraders looking to scalp dimes!
Seeking Alpha has some excellent articles as well as some clueless. But the commentary following the articles has been excellent from some perspicacious VIX observers.
Both leveraged and inverse ETPs suffer from so-called beta decay (aka volatility drift). The decay is more pronounced in the X3 ETPs.
A double short of pairs such as NUGT/DUST, JNUG/JDST, UGAZ/DGAZ has been a winning strategy this year.
These ETFs are NOT scams.
Google "leveraged etf decay".
"Some people are too lazy to do the least bit of research on a company and buy stock in anything .
But they will spend 3 weeks researching a $50 toaster."
You're absolutely correct, hb.
I recently spent three weeks researching a new toaster oven and then my wife returned it because it was the WRONG color!!
But the joke was on her. The toaster remains!
She returned my Wideboy™ by mistake!!!
"the fact that etn's rarely get scrutiny from the SEC and the fact Credit Suisse continues to offer notes which flood the market and forces TVIX into contango makes it the perfect scam"
CS issues notes to meet demand -- to keep TVIX trading nears its intrinsic value. It does not "force" TVIX into contango; TVIX is never in contango.
The front two months VIX futures are usually in contango. It is that contango coupled with the so called β-decay mathematically intrinsic to both levered and inverse ETPs that propels TVIX on its never-ending asymptotic journey towards zero!
PS: TVIX is NOT a scam; it performs exactly as by promised in its prospectus!
Sierra "news" is complete utter nonsense!!!
PLKD excels/succeeds in one thing only -- printing shares; it is, imo, nothing more than a stock dilution scam.