UVIX is not suitable as a long-term holding due to accelerated decay, high expense ratio, and failure to consistently deliver 2x VIX returns. This ETF only partially captures VIX spikes and requires vigilant monitoring, making it best used as a tactical, short-term tool during volatility surges. Negative roll yield in contango and volatility drag further erode returns, while the market's resilience to volatility spikes limits UVIX's effectiveness.
UVIX is a 2x leveraged ETF tracking daily VIX futures, suitable only for short-term trading, not long-term investment. Due to daily resets and market growth trends, holding UVIX long-term leads to significant value decay and heightened risk. Traders can tactically use UVIX during major economic events, but must exercise strict discipline to avoid unsalvageable losses.
A volatility premium has opened up, which we expect to unwind in due course. Macro variables are on a knife's edge, and docile put buying has dragged the VIX into a lagged territory. We anticipate reversion to occur. The ProShares Ultra VIX Short-Term Futures ETF has suffered serious losses recently, yet, we think it's bound to benefit from front month volatility being seemingly underpriced.
2x Long VIX Futures ETF is a risky, short-term trading vehicle that decays over time due to contango and leverage-induced negative compounding. Geopolitical events like the Israel-Iran conflict can cause short-term spikes in UVIX, but these gains typically fade quickly. Given the short-lived nature of volatility spikes and its design, I rate UVIX a Sell and advise against chasing recent gains.
Volatility ETFs are on the rise as Trump's renewed tariff threats sent the VIX fear gauge soaring 29.3% last week.
Volatility has soared to the highest level since August. Investors can benefit from this trend with ETF/ETN options available in the market.
The UVIX ETF offers 200% exposure to short-term VIX futures and can deliver spectacular short-term gains during market stress. However, over the long run, the UVIX has had abysmal performance and is a good short candidate due to its perpetual decay. So far, markets have declined due to Trump's tariffs, but I believe it's not yet time to short volatility as earnings expectations remain high.
Volatility roars back amid trade war fears and a slowing U.S. economy. Investors could benefit from this trend with ETF/ETN options available in the market.
The VIX spiked to its third-highest level in August 2024 due to widening bid-offer spreads, reflecting investor fears amid geopolitical and economic volatility. Despite a post-election drop, the VIX remains in the buy zone, with historical patterns suggesting potential rebounds above the 20 level. Rising long-term interest rates and geopolitical tensions could trigger stock market corrections, pushing the VIX higher as investors seek price insurance.
Volatility roared back amid market rotation and growing anxiety about a slowing U.S. economy. Investors could benefit from the rising market volatility with ETF/ETN options available in the market.