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Don't Short UVXY - Volatility ETPs are risky

5 609 views | 2 Dec. 2019

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Brent Osachoff , volatility trading strategies, VTS , VTS options, volatility trading , Volatility ETPs, options trading , investing , stock market, VIX, VXX, UVXY

Simion

First of all, if he meant 20% of account - that doesn't protect you againt a 5x spike., but 3x. Those who short know better.
Once the 20% position goes up 3x (a gain of 200%) - his position is worth 60% of the original account value, but !.. Also the account value dropped 40%. that's the exact middle where the position = account value. Assuming he started with 80% cash - he just ran out of it.

So technically with 20% short position and 80% cash - one can sustain a 200% in stock rise at most, before needing to add cash.

desi sher

At 6:55, I'm not sure where you are getting the +737% rise in the UVXY - just before the Feb '18 crash it was around 45 at it's low point, and spiked on 08-Feb-18 at 139.5, so I make that a roughly 200% increase in UVXY.
Also, why would anyone short by selling shares? It's much safer to just buy puts. There are more complex reasons why even this is not the most efficient way to short the UVXY (due to skew etc), but it's much easier/safer than 'shorting' as you describe it.
Don't mean to be dis-respectful but this whole video was "don't do this, don't do that......" and if we want to know what to do instead, then of course, we are directly to your website (and I assume some paid-for content).

DallasPilotCar

I cannot wait for UVXY to spike. It happened not to long ago and I did not catch the whole spike up but i did profit. I just wished I had not bought back in. I am holding it long now and it has lost half it's value. Do you think it will go back up before the end of the year with the certain correction coming?

Dawn Ripper

I have no current intention of getting into volatility trading and I'm not an expert, but I was just wondering how a trailing stop-loss would affect this strategy? I noticed that when VIX's typical downward movement tends to be relatively "stable" when compared to its rapid spikes upward. I can tell just by looking at the chart, but this can also be seen using the VVIX index.

If you were to place a trailing stop-loss order with a percentage that is beyond what would be triggered the typical volatility levels of VIX, the position will only be closed if VIX rises too much relative to its lowest position. Immediately, I can think of one big flaw with this and that is the weekend or the time in between trading days. If the VIX opens up high to begin with, you're already screwed. Of course, this can be avoided by using this strategy intra-day only (automatically closes the position at the end of the day). Though, I have no idea if the long-term trends are going to look the same with this strategy.

All of this is already too sketchy to me and it's probably a meme strat, but I wanted to know if there are any other major flaws with this logic.

Bill Huff

And it just did...

Ed B

A good video with a clear message, nicely done. The simplest way to protect a main portfolio is to setup a separate trading account, for example at IB (my personal favorite). If a volatility spike occurs, their maintenance margin requirement will ensure that their computers automatically buy to close a short UVXY position long before it goes to zero. UVXY is a fantastic trading instrument and I use options, although I have had short positions when options were exercised. Risk management is critical!

Mike Rosol

what if you took profits out of your account each month.. ;) so when it blows up and u end up getting a margin call.. ehh .. who cares :) profits are sitting in another account

Steve Bodnar

Shots fired!!

Bj McIntyre

WHY NOT Buy LEAP puts don't short the etf that is stupid

mohammad rahmaty

Thanks!

Finom Group

Like watching the greatest of gross ignorance compounding daily.

Antonio Caldas

Great video!

Dewey Jones

Excellent advisory! Pay attention. I lost my shirt in Volmageddon, RIP XIV!!!


No matter the intent of the tweet, be educated and judicious with UVXY.


Michael, the tweeter in question has been posting his trades for years, he shares day in and day out his specific weekly trades and does so for free. He shares his success and his failures. Actually the 20% tweet in question is way outside of the weekly and monthly credit put and call spreads he trades so it's probably not as studied as his other stuff.


But no matter what, VTS is giving you excellent free advice here.

Calissa

Help Plz! Bought UBXY @ $126 (now @ 90) 3/20.20 Bear sediment!

David Lincoln

This is a very time sensitive comment but today the market doesn't feel like it is in a great spot to short anything, Even though things popped today, the vix is still in a low to mid range. Fortunately my position is just that I own some bs. puts all the way out in sept 2020......

VTS - Brent Osachoff

For lots more of my Volatility Trading info: https://www.volatilitytradingstrategies.com/volatility-dashboard

David Lincoln

I think like half of those people are not trading vix products anymore.

whocareswhoiam2day

I lost 450k on this event half on shorting uvxy, half on bear spread put uvxy option strategy? since I not play anymore with options

At the Money

How can you go long VIX with maximum risk reward possible?

Donnie Campbell

I am buying 1 to 2 month out PUTs on UVXY. This will limit my loss. I only keep them about a week before I re balance to the next strike price.

James Bradley

Excellent content and valuable!??

Rahul Chahal

Your thoughts on going short VXX? Or should we stick to SVXY, ZIV rather than risky UVXY, TVIX

vcanalyst

I think he meant 20% of the UVXY position not 20% pf the account.

Joanna Huc

You explain complex concepts in a clear and accessible manner. Thank you for your efforts and valuable free education.

Drew Dunson

You idiot

0

OR you could just buy calls on uvxy with a portion of your profits... ?

Damon Verial

Bad advice.


Leveraged ETPs are structured via future contracts in a way that makes the ETPs decay over time. This makes the short side a reliable bet.


I make good income from shorting VXX (basically the same as UVXY and TVIX). I use puts, so my losses are limited.

scottyflintstone

uvxy put?

Mack

lol Man I'm naive. Thanks for the info. Super interesting stuff, gonna give you a follow.

Jignesh Soni

I came across your video and I 100% agree with you. It is just silly to short UVXY. But I do the opposite. I hold UVXY long position with some % of my portfolio. I then hold these positions for years if I need to. It can be emotionally draining but you just wait for the lottery day. I setup limit orders on all my positions at multiple levels. Let me know your thoughts on this?

melodyoflife

March, 2020, VIX went up 10 times, or 1000%. That'll wipe out that twitter guys plan. We can never predict how high VIX can go up and how fast. Maybe next time it'll went up 15 times.

Tom Walker

Does stop work on tvix?

Short volatility

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How Short Term Traders Can Survive Unprecedented Volatility

13 342 views | 7 Mar. 2020

If you want to understand,

If you want to understand, as a short term trader, how to survive this crazy volatility don't miss this video. Register for our free intensive trading webinar http://smbu.com/spencer

#smbcapital #stockmarket #daytrading

*SMB Disclosures* https://www.smbtraining.com/blog/smb-disclosures

Tom Burns

Let me give everyone the short answer:

Adjust your size.

JMira

Was wondering if the good folks at SMB or anyone really could help me with this. I just got scanz and Im having trouble filtering ATR and RVOL. Cant seem to get an ATR filter of 0.8. On my previous scanner, trade ideas, I could just enter 0.8 and voila, it scans for those stocks with the 0.8 ATR. On scanz however, it has the time interval and time period which trade ideas didnt have and Im not sure what those are supposed to be set at. I always thought it was daily over 14 days but when I select those, the scanner shows nothing at all, meaning 0 stocks. When I take the ATR filter out the stocks once again show up. And for RVOL, theres isnt a RVOL criteria to select so if anyone has scanz and knows how to get RVOL up, please help. Id really appreciate it.

Paul Dacus

21:01 Now THAT'S camera savvy! He held it together, no edit at all :-)

Alex

Hay!! Do you think the oil will start a down trend? For how long?

Primo

I've always had issues when it comes to understanding inflection points. They why of it and how you trade it. You explained it a bit on this video but would definitely like a whole video on it if you can. Thank you so much in advance!

james jones

Very informative video and an excellent presentation.

Please do a video on trading small caps stocks?

WOLF TRADING

Congratulations Kenny, now go grab those 50k headphones!

Patrick Waugh

Omg! This video was way more informative than I imagined! I'm dying because you got into risk management and answered a question I had been considering today! Like you read my mind! And the use of alerts has been critical for me since I can't trade full-time yet. Lucky guys that get to be in your morning meeting!

Josh Jones

To clarify -- front-month VIX futures (March) traded a high of 39.80 premarket Friday, and this is the high for the contract through Friday the 6th of March 2020. Since the curve is in backwardation, further months are also trading lower. The VIX index itself starts quoting near European open at 3:15AM ET, and this hit a pre-cash open high of just under 49, so maybe this is what you're referring to with your 50 number, but this is not VIX futures. All that said, thanks for the video Steve.

Foto Guy

This is a GREAT VIDEO.... Awesome!!!!!
Content on trade levels and practical real-time trade level presentation with the Charts
this helped opened my mind !!!!!! Thank You. this will help me study this weekend and have a practical game plan for Monday I would love to be in the morning meeting for a couple of mornings

M S

VIX mooning to 100

Gil Kerr

Thanks Steve , super informative. Double checking price levels. wild times wild opportunities. Bring on MAD Monday .

Lolke Dijkstra

What it comes down to: sustainable performance. What has your performance been this year up till now?

Danny Conway

Appreciate all the info you guys provide. Absolutely the best out there. Thanks from a novice options trader.

Skimyworld08

Microsoft .

alex lassalle

Thanks Steve for your insight! You making me stronger ??

alex lassalle

What are your thoughts on $TLT next week after the fed meet?

matt mckoen

So I found a video from SMB called "how to exit your winning trades properly" really useful and wondered if there were any vids based around 'how to exit your losing trades properly' because I'm sure just getting stopped out for max risk isn't very efficient and not always necessary- any advice or useful sources from the pros? do you scale out or cut it after certain time-periods or what's your thoughts?

Patrick Waugh

I'm not surviving, I'm making bank! Your videos have helped me. I caught a great breakout trade on INO as I normally do, but with your info on using a news catalyst, I took it to the next level and scalped it but then also bought back into it on retracement as a swing trade with profits. Got in before the smart money too!

C FC

Excellent video! Full of great information and tips. Thank you!

calico9901

Thanks for breaking this down Steve. This was a day of underperformance for me and I will definitely be rewatching this. Congrats Kenny!

Leslie Savage

Great video and information due to this high volatility trading environment. Right on time. Thank You

Jaime Eee

Thanks for the video

Daryl Davis

"Preperation"?

Esji

Whoa! That's something for the playbook! Wow!

mn _

Steve, how can we make to your morning meetings?

Man Child

With content like this. was able to pick up TLT 162 calls on Thursday for .12 and sell them Friday for 5.00. Thanks so much for all your lessons!

Sulayka Silva

Hi! In your experience what do you think is best: exiting a position with a trailing stop or hitting a 2x target profit every single time?

razzy p

35 on the VIX .. strong possibility..but stops in place.

alan tuchman

another great video, from inside the mind of a superb trader.

J on

Videos are too long. Please make them under 10 minutes.

Paul Dacus

Ahh SPY in 290's... I remember it well.

Matt33381

Very informative! See you online in the morning for the weekly review.

Stawk Rocket

Thanks Steve. Did the DNA years ago and still really appreciate your amazing insights. Would love to hear more about how to trade the trader, also working on entries off the levels, width of stop, pos'n size and cognitive bias, for whatever reason, I usually miss the bounce off support, then my eyes pick up the rush to resistance where I then want to go long. So my question is how to retrain to be counter intuitive to avoid being led by the nose. Cheers

Dark Knight Tradr

Great advice, as always, Steve much appreciated. For ideas for potential future videos had mentioned during one of the weekly reviews if a video on how to trade stocks with M&A news catalysts would be useful? Oh and congrats to Kenny on hitting his goal, well done!

al karg

One of your BEST videos in time, detail & explanation (& graphics to back both up) I've seen from you, Kenny!!!
Congrats & Thanks for your time-investment here & to SMB staff....speaking for many who have not here taken the time (for various reasons) to do so. (though yer numbers/members are growing)

TheRedoxS

This video taught me so many lessons, I was doing exactly what you said, traders shouldn't be doing. I faded ES just before the closing hour.
My prep wasnt good enough, I missed the whole move up, even though I could clearly see on the cum delta, that buyers were more aggressive and higher vol, then sellers.
Thank you for this
There's so much to learn everyday.
I will keep the information for the week going forwards in mind too.

A question, if T-notes are going to revert and prices fall back down, do you think SPY will eventually stabilise and rise too?
The other way I have been thinking about this is that, bonds are pricing stuff more appropriately and that SPY still have some downside to come.
Would love your thoughts on correlation between SPY and TLT. When it breaks, divergences and etc.. thinking about the coming weeks

Andre Corniel

The market is very uncertain, we’ll see what happens in the future. Great content keep it up !! I keep trying to teach this stuff on my YouTube channel too ???

Tommy Hodges

Thank you Mr. Spencer. I actually had to sit out a lot of these days on my futures account in the mornings. Too easy to get run over with my smaller account size, I moved to ZN and trade the Globex sessions as it's easier to control risk and set ups I like.

TaeLisa Shipper

Is that a 2-minute chart? Do you mostly use 2-minute charts for intraday trading? What do you think of 5-minute or 1-minute charts?

Alan Guo

can you go over what characteristics on the "market stocks" that tend to follow the market closely? AMd is not a particularly large company, especially when compared to the likes of aapl, msft, amzn etc. what makes AMD a market stock, and what are some other market stocks you guys keep track of? Thanks

VeggieGiant

EXCELLENT VIDEO - thank you for sharing. I will be signing up for SMB U soon.

UKST10

Thanks Steve. Can you suggest a list of stocks that move slow enough to learn how to read the tape for "one good trade"?

Amber Ali

Do you wait for break of key level before entering into a position

P8qzxnxfP85xZ2H3wDRV

I've waited more than 10 years for this opportunity. Last time I vowed to myself to never miss a crash again and have made plans for almost a decade. Like every plan, it failed on day one, but I adapted and am still up almost 10,000% so far.

Absolute Boss Collective

Headphone segment was a nice touch!

Joanna Huc

Great video. Packed with details. Will have to watch it again. You guys are the best!

Michael Ali

Thanks for the timely upload

Short volatility

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Buy & Hold Short Volatility Does Not Work - VXX, UVXY, TVIX

7 578 views | 11 May. 2020

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Brent Osachoff , volatility trading strategies, VTS , VTS options, volatility trading , Volatility ETPs, options trading , investing , stock market, VIX, VXX, UVXY

Daniel

Accidentally 46% of my portfolio today lol

Dhiren Majhi

G

M M

This is absolutely golden video. I lost 20k holding vix.

Fortunately it was just a demo account.

ali kermani

When is the TVIX going up dude! You hardly talked about TVIX. If it drops below 100 I'm buying a shit ton. Your ass said it won't go back up in another video u did. The volatility is going to be high very soon!

David Lincoln

It looks easier than it actually is when you look at a 5 year Vxx chart.

Ben -jamin

So if you can get tvix under 40 you dont think its worth it i mean a crash some point in tike in my life will happen again?

VTS - Brent Osachoff

For lots more of my Volatility Trading info: https://www.volatilitytradingstrategies.com/volatility-dashboard

The Guv'nr

I find it really amusing that, on a video where Brent tells not to B&H long volatility (or short for that matter) we see people declaring to average down on TVIX.

Jake Hunter

Thanks for the education very useful
#JakeHunter88

Michael Ashe

What frame rate are you using on your videos? It looks strange and jumpy, particularly on my tv screen. (I'm not talking about your editing jump cuts)

Sebastianus Oscar

How about buy put on monthly basis? Should've made money most of the time right..? And has a limited risk when volatility spike high during market crash.

Jefo Steel

What is the difference between VIX (cboe) and VIX futures?

L A

I bought 46 shares of TVIX and I’m loosing 1600 already. I am not sure if I should trade it now before I loose it all . I’m new on stocks.

Srinivas S

what is your opinion/advice on TVIX? will it go up in next couple of weeks. ? huge loss 10k..should i hold or get rid of it??

caano nuug films academy

Hi sir I’m mohamed from Singapore
What I can do it I just used swings trading and almost lost 6k usd

al

Lost 9 thousand trading tvix. Thought it was goin to spike back up but despite record unemployment and a shattered economy tvix just kept melting. Im really goin through it right now anyone felt this before?

HAYSQ

I just bought TVIX for 145 USD and now it dropped really quickly to 129 USD. My plan is to wait for the next market shake but seems like i did not time it.

Please advise, should i sell and accept my losses or should i hold for couple of months.

Vineel Pusarla

hi thanks for your educational videos


When the VIX approaches it’s 52w high why aren’t more people stocking up on 6+ month puts, or shorter expiry and ride the volatility down to what it typically trades at 90% of the time.

Fishn Giggles

Your videos make me feel how dumb I am at everything

JASON JACKSON

Way too many big words for me

R D

I'm learning a lot from you. Thanks! And I appreciate the response to my email!

The Guv'nr

While intuitively it feels like insurance products like VXX / TVIX / UVXY should decay over time, there's nothing preventing the sellers from continuing to misprice the futures (i.e. not demanding enough premium) and get burned over and over. This year's horrible short vol performance tells a story here.

Brian S

so wouldnt it be a great time to buy now as stocks are at all time high and uncertainty is sky high?