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Published byEdith Jackson Modified over 9 years ago
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Proshares Ultra VIX Short-term Futures ETF (NYSE: UVXY) Andrew Jiao, James Day
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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
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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
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The VIX in the past 5 years
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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
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UVXY since its inception
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UVXY over the last 6 Months
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(UVXY) Current price: $33.78 52-week range: $28.88 - $334.20 Average daily volume: 6.7M Note: prices are split-adjusted.
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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
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Recommendation ●Short 7 shares
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