Every day TVIX buys the next month contract of VIX futures and sells 1/30 of it's current holdings to pay for it. Since the price of the futures it is selling is almost always lower than the price it is buying (contango) it owns less contracts every day. Which is why this can lose 80% per year. How this was ever approved to trade in retail accounts is beyond me.
DWTI is a much different vehicle. You are comparing a 3 x ETN which normally benefits from contango and linked to a commodity which should slowly go up overtime (with of course big movements from time to time, of which down has been the most recent benefit to it) , to a 2 x ETN that benefits from backwardation (which it is rarely in)and linked to something that always reverts to the mean.
No stops, but it is a very small portion of my portfolio. At max 5% during volatility spikes. Back testing showed that this would have only gone up 10X from it's low during the financial crisis, and then quicly erased all of it's gains by the end of 2009 (so we are talking maybe it could go to $10, and then back to $2 in a year). I also sell call spreads on UVXY during volatilty spikes in my IRA, out of the money and 1 to 2 weeks out. 10-25% return weekly depending on how much risk you want to take. Again this is done with a very small % of my portfolio, and you have to be patient.
If you have a long enough horizon you can't lose. TVIX went into contango with the VIX around 20 after this last spike and It only spent a few days in backwardation. March VIX futures are still trading in the mid $18's. Even 1 month of VIX at or around 15, and TVIX will lose 35%. The reason it looks like there is a base at $3 is because since October the VIX has spent most of it's time between 15 and 20.
You are just seeing the switching of the futures contract being followed, from Feb to March. The difference between these 2 futures contracts is called contango, which is what gives TVIX such pooor long term performance.
You can win either way trading, or lose either way trading. If you give yourself an 18 month window (even 6 month window) of time, there is only one correct answer. The reason is that the vix futures contracts are in contango roughly 80 % of the time, which is why the pps will forever approach zero $.
100 is not possible, but good luck with that optimism there. It is much more probable that we will be under $2 in 2 months
Yeah, I think TVIX will announce much better than expected free cash flow this quarter. Maybe a special dividend coming. LOL
I would suggest starting with the prospectus. In there they explain that this will always gravitate toward zero with some bumps up along the way.
The prospectus is spot on so far. Accounting for the reverse splits this ETN has gone from $10,000 to $2 and change.
Not when it's value is determined by something else. A market maker would notice the difference, buy the ETN and sell the futures. Once they would come back in line they would unwind the trade. It would be the easiest way to make a free buck... which is why there is rarely a large difference between the NAV and the price.
Of course many of TVIX's shares are sold short. However it has little impact on the day to day price movement. TVIX is simply a leveraged device that follows an index. The index follows the vix futures. It trades very close to it's NAV at all times. Long story short, Short positions have no impact on longs. The ETN will always approach zero... that is what it says in the prospectus that you didn't read. GLTA