A couple of important items there. Ultra means 2X. So this will be twice as volatile as it's cousin, the $VXX, which is plenty volatile. The part is the intention to deliver DAILY results. One can question whether this happens, but there is no question that on anything past one day, you will see a wide departure from the VIX.
The VIX is a specialized product that attempts to judge the volatility in the market. I could go into a long winded explanation of how each of these products works, but for now, it's enough to know that when the VIX works in the opposite of the stock market (specifically the SPX) and that the market goes up, the VIX goes down.
When the VIX shoot up, $UVXY will shoot up, twice as fast. When the VIX goes down, $UVXY craters. When nothing much happens, $UVXY will fall from contango, which is essentially the decay of futures contracts on the VIX.
As I said in the title, you can buy $UVXY if the $VIX is rising in the short term. You can short it if the $VIX is falling or if it not moving. What you shouldn't ever do is buy and hold $UVXY. It will slowly decay because of the contango.
$UVXY has only been in existence since October 2011, In that time the split adjusted price has gone from $395,000 to $31.
Read that again. I'm not kidding.
Never hold it more than a day or two. I really don't even recommend buying it, but I know some people will. Good luck.
A good day on the market for me. I shorted $XIV as a hedge, but it wasn't necessary to today.
| Close | Initial Short | Gain (Loss) | Percent | |
| NUGT | 9.00 | 10.47 | 1.47 | 14.0% |
| BIS | 26.77 | 29.75 | 2.98 | 10.0% |
| TZA | 8.82 | 9.90 | 1.08 | 10.9% |
| VIXM | 52.32 | 54.17 | 1.85 | 3.4% |
| RUSS | 30.64 | 30.40 | (0.24) | -0.8% |
| CORN | 23.43 | 22.68 | (0.75) | -3.3% |
| FAZ | 10.65 | 11.26 | 0.61 | 5.4% |
| UVXY | 31.81 | 40.68 | 8.87 | 21.8% |
| FXP | 28.22 | 27.58 | (0.64) | -2.3% |
| XIV | 49.68 | 48.70 | (0.98) | -2.0% |
| SCO | 54.13 | 55.93 | 1.80 | 3.2% |
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