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Unfortunately yes, I've waited hoping it will bounce back but I no, it never seems to recover so I think I'll sell and take a near 70% lose on Monday...
Alright, let me take a look at it together. I have been trading since the mid-90's so I will give you my 2 cents if you want it. I got a run out to the market and get my late day cup of coffee. My initial motivation to contact you was to make sure you understand these ETNs (the inner workings and how the contracts roll, contango, backwardation, etc.). So let's analyze this together over this medium (this thread). Give me a couple of hours. Remember you always want to live to fight another day. You will be fine, you might take a significant hit but let's look at it together make sure you aren't puking it at the wrong time -FT
Unless we get a successive shock of volatility (severe selloff in the S&P 500 very soon) this ETN will just continue its journey south (its contango decay which happens during a market that is not in bear mode). Shocking that shares were trading at 12,000,000 per unit, unbelievable, right (look at 2nd jpeg)? They have been reverse splitting UVXY from its inception. You see the problem here is the product itself: its a 2x ETN which is a derivative of VIX futures contracts and like all futures contract they expire. The managers of this instrument have to continually buy next month's contracts and close out the front month. If you look at the jpegs I did for you, the VIX spend a majority of their time in contango (because markets are spending most their time sideways to moving higher take that in context of this conversation) which means the the further out the months are, the more you have to spend on your volatility insurance. Makes sense, right? Because it's the unknown what could happen starting from now, this point of time so to speak, to 2, 3, 4 months out, 45, 60, 90 days, etc there is possibility of uncertainty ("something could shock the markets in that span of time") so more premium is demanded for the potential risk of that happening. For example April VIX Future contract is trading at 16.35 where the February VIX contract, the most current contract, is trading at 13.85. So if no shocks are happening to the market, the managers of UXVY have to close out the current contract at a lower price for what they paid for it when it was 30 to 45 days out from the date of their original purchase as they paid a premium for volatility protection with the additional time. Sorry if I am repeating myself but i wanted to be thorough. It's this continual rolling of contracts, you are fighting an instrument that will ultimately will most likely go to zero. Hey, its not like we can't go into backwardation (the opposite of contango) which does happen, not often and it is short lived. Now your in case if we get a short term shock (selloff) the UVXY will spike and obviously a good time to unload it in my opinion. I will wait to you respond and we can continue discussion on short term strategy.
Cheers Big Mike, that actually does makes sense. I am new to this and forums, I will spend more time on learning the correct protocols, etc. A quick question is the content deleted forever or can I use that thread to continue my discussion with Clashing in a new thread? Instead of rewriting some stuff again. Thanks in advance -FT
Greetings big mike and all,
My journey has been long and difficult and Expensive...
LoL (sorta).
All my own fault.
No one to blame but me.
Had to stop because my mental state was near to sucking on a gas pipe or some crazy destructive thing.
It got me to do some serious work on my own internals.
it brought me to the point of admitting some bad stuff, biggest thing was plain and simple I was a drug abuser.
Spent lots of time over the years in 12 step programs never really worked for me.
Then found a guy, Jack Trimpey at a place called rational recovery.
That some how turned the lights on for me and have been clean for over a year now.
The thing about getting clean is not that it will end your worries but exposes the reason for self medicating.
I know there are some who can use drugs or drink and even make money trading but for me this does not work.
So with a clear head ( not that all my issues are solved).
am back at it again.
Working the Combine at Topstep trader.
Goal number one pass a combine.
