Vlispxpert's Underground

[$tockfather]

TVIX performance is NOT only based on whether the markets go up or down but has more to do with the volatility leveraged, VIX index, VIX futures, Fear Index, and market conditions(backwardation or contango)

TVIX is one of the toughest to time correctly and trade successfully on the buying side, especially when being in a Contango market. Short sellers have been prospering like crazy with TVIX in recent years during Contango market, however once the markets turn bearish buyers will then prosper during backwardation...

Contango causes the price of TVIX to decay, but backwardation will cause the price of TVIX to explode.

Contango is when the futures price is above the expected future spot price. Because the futures price must converge on the expected future spot price, contango implies that futures prices are falling over time as new information brings them into line with the expected future spot price.

Normal backwardation is when the futures price is below the expected future spot price. This is desirable for speculators who are "net long" in their positions: they want the futures price to increase. So, normal backwardation is when the futures prices are increasing.

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