You have to be positioned for the fall. Once the jobs report comes out (ie 200K jobs).. Market will be stable and nothing will happen. This will take the sails out of the fear trade. If it goes back to 15 from 24.75 now, you are talking 65% loss for UVXY or about $21.
After each spike this thing gets hammered even more. The bigger the spike the bigger the drop.
I hope you don't have a big position. I'm guessing 10 contracts (1000 shares).
Nightmare scenario is opening of $15 points down and having you broker close you out if you don't have enough equity in your brokerage account. If it is 2K shares or more an you only have $20 - $30K account they could go after your other assets.
If you like XIV I would sell puts at this point with downside protection. Eventually VIX will turn into contango and XIV will profit from contango.
It is probably the best to buy XIV during recession and hold for long term. During last recession XIV was at $4 and it went to $50. So $40K invested returned $460K in profit. You can buy 2 condos and rent them good enough to live in Spain without having to lift a finger.
Huge risk for those long fear trade.
Saudi Arabia stocks closed up 1.2%. SPY will go for break of 200. At that point you'll get short covering in panic propelling it to 204 quickly after jobs report. 204 - 206 - This is where it will pause until FED meeting.
For VIX, cash at 26 goes sub $20 this week. Same thing for front month. From 24.425 to 19 in one week. This is 22% loss for index and 44% loss for 2/3 holdings of UVXY. NAV is at $60.23 so UVXY would yield $33.72, however 1/3 of the fund is invested in October VIX at 21.75. So 1/3 will go down 25% in UVXY terms.
So to average it out, UVXY would be down 29%-33% this week. I think it will start with Monday and by Friday UVXY will be trading at $39.
rally so they can portray strength and unity.
This correction is over. We now go into the football season and all eyes will be on fantasy football leagues, grilling and tailgating, plus Labor Day holiday.
Everyone I know is traveling somewhere.
I wouldn't bet against the company that has $200 BIL in cash.
You can bet they are working on TV, Car, new phones, TV service that will enable you to choose your own channels.
Also, while market tumbled Coal stocks were up 30 - 40%. Soros took a stake in Peabody as well and Icahn in FCX.
I'm beginning to think that energy stocks / resources that were beaten down in the past 9 months will be in play again. Expect sharp rebound in this group as billionaires tipped their hand already.
He said the same thing on Friday while the market was open.
Non-news since he's been always hawkish.
You never know with options.
They can get you exercised (money is only exchanged) or assigned (you get the position assigned).
So even if you closed in the money they could have still done that to you.
How much stock? You might want to sell in premarket.
$5.5 BIL stakes is not too small. Money talks. VIX is too high.
If energy returns into play we are going to 2250 by year end on S&P.
UVXY owns 2/3 of 24.75 VIX and 1/3 21.75 VIX. They are rolling over on a daily basis.
This helps UVXY by 0.50 per day at this price.
That said, UVXY NAV is $60.23 on a closing basis. So that is already $3 loss from here. VIX at 24.75 is also very high. It can easily drop to 19 - 20 range with jobs behind us on Friday. If SPY holds its own, doesn't move much or volume is down I expect VIX to be down. That would bring us back to contango and UVXY would be losing $0.50 per day.
So I can see mid $40s and high $40s as possible or likely. That is only 9% move down in elevated VIX.
The move in VIX to the levels we've hit in the past 2 weeks would signal depression. If there is no confirmation of a selloff I expect it to be low. FED wants volatility to be down in the low teens so they can raise the quarter they want.
I actually think market will be up all day and UVXY will be under $50.
In the last hour if the market sells off UVXY rises quickly. If market holds, UVXY will close where it is. Next week it is anybody's guess, however VIX is high right now and UVXY could be in for a painful slide.
Proshares is now invested at 23.375 VIX and 21.75 VIX. Those are high levels comparing the last 3 years. You can expect easily to lose 2 points if market goes up again tomorrow. Most of the cash is tied up at 23.375.
Spot is now at 26.10. Spot could collapse tomorrow and that will hammer the front month. It is also Friday so they'll target VIX anyways.
I'm guessing close of $47 - $49 tomorrow. Japan retail sales are up 1.6% so I expect Nikkei to be up strong again leading the rest of Asia. Oil was up huge today and there are a lot of oil stocks down 30%.
40% drop easy in this tape. SPY up 45, DOW up 358.
Time is approaching soon. Not sure what will generate the event, but we are about to find out.
If spot stays stable, VIX 1 month out should rise and also VIX 2 months out will benefit due to backwardation during rollover.
Any more selling in SPY and we'll see VIX 1 month out at 25. That is 75% gain in UVXY or approx. $60 - $70 if we count in backwardation.
Market will have a weak bounce and go down again. UVXY drops to $38 and goes back up to $42.
There is a bit of a backwardation going on right now. Fund is selling 19.98 VIX and buying 18.65 VIX (2 months out). Roll has started already.
Spot VIX is at 28. Spot VIX will drop and even the front month could lose 1-2 points, but due to backwardation UVXY should hold its own for a week.
Week after that I think UVXY wont' be able to hold on and will get decimated as FED speakers will prop up markets.