Graphic Evidence of UVXY Crudiness

10/31/2014 8:00 am EST

Focus: STRATEGIES

Mark Sebastian

Founder, OptionPit.com

Option trader Mark Sebastian, of OptionPit.com, charts the yearly progress of the volatility indices and warns traders that, unless the market is exploding, one ETF is a huge stay away since the only thing it will protect is a wallet from getting thick with cash.

Over the last three months, both VIX and VXX are actually up (albeit slightly for both).  You know what is not up on the year? UVXY and TVIX.  The combo of levering and contango make the product pretty great in a market where the VIX is exploding (see mid October) but pretty awful the rest of the time.

chart
LivevolX® www.livevol.com
Click to Enlarge

The Trade:

Unless the market is exploding UVXY is a huge stay away as the only thing it will protect is ones wallet from getting too thick with dollar bills.

By Mark Sebastian, Blogger and Contributor, OptionPit.com

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