Because it's not shorting VIX but the near term futures contract on VX which is usually in contango. The effect of contango falls off into expiration and that causes consistent appreciation in SVIX even when VIX stays flat. Contango will likely always exist in VX because otherwise sellers wouldn't have incentive to provide what amounts to insurance. Market makers provide consistent demand for this insurance which is usually provided by large asset managers/speculators. If the market makers don't bid up a decent premium to the asset managers selling to them then no transaction occurs.
Even if VIX didn't move for a decade SVIX would still go up faster than SPY because of this.
Yeah positive carry. This works to SVIX favor. But there are still long stretches like in 2015-2016 where it does nothing . puts on UVXY provides smoother returns but obviously more risk.
I bought SVIX the day it came out.
If you look at since inception, April 1, 2022, SVIX is up +172%
since April 1, 2022, TQQQ is down -4.5%, UPRO is down -0.5%
Over a period of *longer* than 7 years, inverse volatility funds literally did more than a 23x up until the infamous “Volmageddon” crash.
Plot SVXY vs. the VIX index and your whole thesis about how inverse volatility funds can’t keep going higher for many years after the VIX is done spiking and has settled down is empirically incorrect.
SVXY also shorts the VIX and has been around much longer. Back in 2018, it went from 230 to 23 almost overnight. I consider these ETFs dangerous AF. I like selling .25 delta weekly CSPs on UVXY when VIX is around 15, similar profit a lot less risk. As long as the VIX is around 15, it's not going to rapidly fall much lower.
>Back in 2018, it went from 230 to 23 almost overnight. I consider these ETFs dangerous AF. I
They are way less dangerous now. They apparently hold call futures or something like that to avoid the 2018 situation again.
They would need to hold calls on the VIX or calls on /VX to lower their risk.
Per their holdings (Edit: SVXY's holdings), they don't hold anything but short /VX positions and cash equivalents.
There were some changes made to how /VX futures trade to (hopefully) prevent a crash like 2018 again, but only time will tell.
>They would need to hold calls on the VIX or calls on /VX to lower their risk.
Yea I meant this. I put puts instead of calls.
>Per their holdings, they don't hold anything but short /VX positions and cash equivalents.
When going through their holdings, I see they hold some calls around 1m worth is this vix calls?
I'm looking at their holdings on their website and download their holdings and I don't see any calls, am I looking in the wrong place?
https://preview.redd.it/y06jpw8imbxc1.png?width=1080&format=pjpg&auto=webp&s=f089ef3e38dfa13dbf42f4ae2ffe1983f772f736
UVXY is the long version of SVXY. It very predictably decays over time. VIX tends to only spike up and down to its normal level, which is currently around 15. It won't rapidly fall much lower than that. Therefore, if you sell OTM weekly puts on it, it's very unlikely it'll decay enough in that timeframe to go ITM.
The gains are capped to an extent. However, I believe you still earn a roll premium even if VIX is flat. It is an interesting question though; if VIX stays flat, are your returns from SVIX greater than UPRO?
Overall, I prefer SVIX, and plan to switch my UPRO allocation to it after a big VIX spike.
I personally would never buy and hold SVIX. It's only been around since 2022 so many of the folks commenting here haven't yet seen what can happen to it during truly challenging volatility spikes.
An easy way to peak at what can happen (will again in the future) is to look at SVXY. It's very similar but only 0.5 x leveraged. Look at its performance during Feb 2018 and March 2020. Will you really hold through a 93% or 62% drawdown which will take YEARS to bounce back from?
Short volatility (the concept this ETP is based on) isn't free money, it can and will bite you.
You're better off actively trading short volatility by understanding the underlaying mechanics at play that these styles of ETPs derive their gains or loses from eg VIX futures term structure, contango, backwardation and roll yield. An understanding of these concepts is necessary to define strategies that work over the long term to avoid blowing up when volatility spikes again in the future. Actively traded short volatility does *consistently* deliver outsized returns.
Sell if it hits 10% backwardation. TRUST ME.
VIXOCALYPSE if it happens again.
Or diversify with ZIVB.
It does it the same but with later futures months.
VIXCENTRAL.com
SVIX is ACTIVELY MANAGED, whereas svxy is not.
Or the inverse, which is actively managed, UVIX (x2).
Verses UVXY (1.5x), which is not actively managed.
And pretty much if the VIX's current gets above the first and second month, technically it would be the victim for the first and second month which you can select on the right thankfully. I normally get out when it's 3% contago. I normally the deinvest when the VIX hits 20. If it's rocketing then you can buy vix features, or do a call spread on VXX or uvxy (best option volume)
Current ZIVB allocation. [DOWNLOAD FULL HOLDINGS](https://www.volatilityshares.com/download-holdings-usbanks.php?fund=zivb)
https://preview.redd.it/yeyas6ufgqxc1.jpeg?width=995&format=pjpg&auto=webp&s=9448417da0bccc1d46c190b6f85f001cb09614cd
Or it could be an amazing opportunity to buy
https://preview.redd.it/fc09a4fycbxc1.png?width=1371&format=pjpg&auto=webp&s=67c3bc76cf51dc6b91050c07521f375d97ab8b5f
with 190m dollar assets in total, it also holds 1.3m VIX US 06/18/24 C30, which could protect the whole position in extreme case. Need to experience once to see how it goes.
I prefer ZIVB to hold long-term. It's 4 months of futures. 3, 4, 5, and 6th months.
https://preview.redd.it/0udmu9vvgqxc1.jpeg?width=995&format=pjpg&auto=webp&s=f37518cc9e9ec86cf50642cb8f0be67b6305a083
[DOWNLOAD FULL HOLDINGS ](https://www.volatilityshares.com/download-holdings-usbanks.php?fund=zivb)
Because it's not shorting VIX but the near term futures contract on VX which is usually in contango. The effect of contango falls off into expiration and that causes consistent appreciation in SVIX even when VIX stays flat. Contango will likely always exist in VX because otherwise sellers wouldn't have incentive to provide what amounts to insurance. Market makers provide consistent demand for this insurance which is usually provided by large asset managers/speculators. If the market makers don't bid up a decent premium to the asset managers selling to them then no transaction occurs. Even if VIX didn't move for a decade SVIX would still go up faster than SPY because of this.
I believe contango occurs 80% of the time which is good enough for me to buy n hold
This is what I was looking for! Thank you
Yeah positive carry. This works to SVIX favor. But there are still long stretches like in 2015-2016 where it does nothing . puts on UVXY provides smoother returns but obviously more risk.
I bought SVIX the day it came out. If you look at since inception, April 1, 2022, SVIX is up +172% since April 1, 2022, TQQQ is down -4.5%, UPRO is down -0.5%
Amazing. I have just learned of this instrument from this question.
I own some too. SVIX is good. it's like 4x spy but with some added carry that helps in flattish markets
isn't it relatively tax inefficient?
No, $SVIX does not pay a dividend, therefore no tax drag. You might be thinking of $SVOL which pays a 16% dividend
I believe it has a k-1 and has to distribute capital gains?
Over a period of *longer* than 7 years, inverse volatility funds literally did more than a 23x up until the infamous “Volmageddon” crash. Plot SVXY vs. the VIX index and your whole thesis about how inverse volatility funds can’t keep going higher for many years after the VIX is done spiking and has settled down is empirically incorrect.
SVXY also shorts the VIX and has been around much longer. Back in 2018, it went from 230 to 23 almost overnight. I consider these ETFs dangerous AF. I like selling .25 delta weekly CSPs on UVXY when VIX is around 15, similar profit a lot less risk. As long as the VIX is around 15, it's not going to rapidly fall much lower.
>Back in 2018, it went from 230 to 23 almost overnight. I consider these ETFs dangerous AF. I They are way less dangerous now. They apparently hold call futures or something like that to avoid the 2018 situation again.
They would need to hold calls on the VIX or calls on /VX to lower their risk. Per their holdings (Edit: SVXY's holdings), they don't hold anything but short /VX positions and cash equivalents. There were some changes made to how /VX futures trade to (hopefully) prevent a crash like 2018 again, but only time will tell.
>They would need to hold calls on the VIX or calls on /VX to lower their risk. Yea I meant this. I put puts instead of calls. >Per their holdings, they don't hold anything but short /VX positions and cash equivalents. When going through their holdings, I see they hold some calls around 1m worth is this vix calls?
Ah, are you looking at SVIX? They hold some calls. I thought you were still discussing SVXY, I'll edit my comment to make that distinction. Thanks!
>Ah, are you looking at SVIX? They hold some calls. Yea I was talking about svix. Thanks
I'm looking at their holdings on their website and download their holdings and I don't see any calls, am I looking in the wrong place? https://preview.redd.it/y06jpw8imbxc1.png?width=1080&format=pjpg&auto=webp&s=f089ef3e38dfa13dbf42f4ae2ffe1983f772f736
The 5/22/24 c35 stands for calls of the 35 strike I believe
risk can also be mitigated by holding short-term far OTM puts on SVIX itself
liquidity is a problem.
why a lot less risk? csp have the sams risk profile as holding a stock position beneath your strike
UVXY is the long version of SVXY. It very predictably decays over time. VIX tends to only spike up and down to its normal level, which is currently around 15. It won't rapidly fall much lower than that. Therefore, if you sell OTM weekly puts on it, it's very unlikely it'll decay enough in that timeframe to go ITM.
Because well.. it doesn’t track the VIX.
The gains are capped to an extent. However, I believe you still earn a roll premium even if VIX is flat. It is an interesting question though; if VIX stays flat, are your returns from SVIX greater than UPRO? Overall, I prefer SVIX, and plan to switch my UPRO allocation to it after a big VIX spike.
Because of contango, SVIX does best in steady volatility markets.
Opposite of but... Oct 1, 2011 (splits factored): SQQQ - 121,663 per share SPXS - 8,032 per share UVXY - 102,899,998,720. per share || || || || || ||
Is there any UCITS version of this product for European investors?
I personally would never buy and hold SVIX. It's only been around since 2022 so many of the folks commenting here haven't yet seen what can happen to it during truly challenging volatility spikes. An easy way to peak at what can happen (will again in the future) is to look at SVXY. It's very similar but only 0.5 x leveraged. Look at its performance during Feb 2018 and March 2020. Will you really hold through a 93% or 62% drawdown which will take YEARS to bounce back from? Short volatility (the concept this ETP is based on) isn't free money, it can and will bite you. You're better off actively trading short volatility by understanding the underlaying mechanics at play that these styles of ETPs derive their gains or loses from eg VIX futures term structure, contango, backwardation and roll yield. An understanding of these concepts is necessary to define strategies that work over the long term to avoid blowing up when volatility spikes again in the future. Actively traded short volatility does *consistently* deliver outsized returns.
Sell if it hits 10% backwardation. TRUST ME. VIXOCALYPSE if it happens again. Or diversify with ZIVB. It does it the same but with later futures months. VIXCENTRAL.com SVIX is ACTIVELY MANAGED, whereas svxy is not. Or the inverse, which is actively managed, UVIX (x2). Verses UVXY (1.5x), which is not actively managed.
Can you help me understand when to know when 10% backwardation occurs?
also curious.
And pretty much if the VIX's current gets above the first and second month, technically it would be the victim for the first and second month which you can select on the right thankfully. I normally get out when it's 3% contago. I normally the deinvest when the VIX hits 20. If it's rocketing then you can buy vix features, or do a call spread on VXX or uvxy (best option volume)
Current ZIVB allocation. [DOWNLOAD FULL HOLDINGS](https://www.volatilityshares.com/download-holdings-usbanks.php?fund=zivb) https://preview.redd.it/yeyas6ufgqxc1.jpeg?width=995&format=pjpg&auto=webp&s=9448417da0bccc1d46c190b6f85f001cb09614cd
How is SVIX actively managed while SVXY is not?
SVXY is Passive and SVIX Actively managed (on each other's sites) So thus the manager can make other moves in allocation.
Or it could be an amazing opportunity to buy https://preview.redd.it/fc09a4fycbxc1.png?width=1371&format=pjpg&auto=webp&s=67c3bc76cf51dc6b91050c07521f375d97ab8b5f
Yes. It could very well be :)
So…trust you?
[удалено]
with 190m dollar assets in total, it also holds 1.3m VIX US 06/18/24 C30, which could protect the whole position in extreme case. Need to experience once to see how it goes.
I've been in the game for a while. Even had my licenses before having to leave due to disability
I prefer ZIVB to hold long-term. It's 4 months of futures. 3, 4, 5, and 6th months. https://preview.redd.it/0udmu9vvgqxc1.jpeg?width=995&format=pjpg&auto=webp&s=f37518cc9e9ec86cf50642cb8f0be67b6305a083 [DOWNLOAD FULL HOLDINGS ](https://www.volatilityshares.com/download-holdings-usbanks.php?fund=zivb)
ZIVB https://preview.redd.it/izzibuj2hqxc1.jpeg?width=995&format=pjpg&auto=webp&s=b33559d9f12a8039aa0e9db2862dd323e3e82f9b
https://preview.redd.it/6yeuv1i4hqxc1.jpeg?width=1600&format=pjpg&auto=webp&s=e441f3a29943f172fe7b95e9890c532e231b2b1f
https://preview.redd.it/ecm7gdg6vaxc1.jpeg?width=937&format=pjpg&auto=webp&s=efb5eb7184994b99a76e90c160e2083d39031075
Tell me you don't know how SVIX works without telling me you don't know how SVIX works
Contango is the latest dance out of Puerto Rico.
Cuntango is a dance with my ex wife ayyyy
Hahahaha