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Proshares Ultra VIX Short-term Futures ETF (NYSE: UVXY). Andrew Jiao, James Day. What is UVXY?. Exchange-traded fund (ETF) - basically a mutual fund that trades like a stock Tracks the CBOE Volatility Index (VIX)’s futures contracts

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Presentation Transcript

What is uvxy
What is UVXY?

  • Exchange-traded fund (ETF) - basically a mutual fund that trades like a stock

  • Tracks the CBOE Volatility Index (VIX)’s futures contracts

  • Designed to give 2x the returns of the VIX in an intraday period (the “ultra” in UVXY)

    • Buys on margin - has negative 100.29% cash on hand

  • Not a company, so there are no EPS reports, dividends, etc.

  • Launched on October 4, 2011


Relevant the vix
Relevant: the VIX

  • An index that measures market volatility for the next 30 days

  • The stock market’s “fear gauge,” or the “fear index”

  • Historical value has centered at around 20

  • Recently has spiked up to 85 after Lehman Brothers collapsed, 45 in May 2010 during the Flash Crash, and 45 in August 2011 after the US credit rating downgrade



Recent trends and info on uvxy
Recent trends and info on UVXY

  • Has had several reverse stock splits due to low stock price

  • -99.85% return since its inception

  • You cannot directly invest in the VIX - instead, you can make positions in its ETFs

  • Extremely Volatile

  • There is an inevitable negative trend, because stocks rise long-term




(UVXY)

Current price: $33.78

52-week range: $28.88 - $334.20

Average daily volume: 6.7M

Note: prices are split-adjusted.


Why short uvxy
Why short UVXY?

  • Inevitable negative trend

  • Extremely small portfolio of ~$1000 needs volatile investments due to commission costs

  • No problems with diversification

  • It is literally designed to go to $0


Recommendation
Recommendation

  • Short 7 shares


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