In order to answer your question, it's worth addressing some fundamentals:
1. VXX and UVXY (among others such as TVIX, SVXY, VVIX, etc.) are "leveraged" derivatives of VIX, which means they move very fast (especially UVXY which is 3x leveraged).
2. It's important to understand VIX Term Structure (if you don't already). Just google the free "Vix Central" website and read away... I'm talking about the concepts of contango and backwardation... Contango occurs when the future price of VIX is below the spot price which crushes inverse VIX derivatives (VXX & UVXY) over the long term. Backwardation has the exact opposite effect (but over the last 5 years or so, contango has been in effect about 80% of the time).
If you haven't already looked at the 10 year chart of UVXY, you ought too... Clearly UVXY & VXX are ever-destined towards $0.00 (they will typically reverse split around $10, just to continue getting destroyed forever due to contango).
3. Don't forget that VIX moves higher when there is an increase in S&P put buying. As such, the (somewhat) cyclical VIX will tend to spike when the S&P sells off. Occasionally, both UVXY and the S&P move in the same direction, but be wary of such instances- either one of them is correcting from the previous day or two, or one of them is about to... If you're unsure, just check out VIX central to determine whether your trade will benefit from the dominant term-structure phenomenon.
4. Implied volatility on VXX & UVXY tend to be inverse. That is to say that most underlying indexes will increase in IV (and/or IV%) when they sell off, but VXX and UVXY don't... I strongly urge you NEVER to buy a long option (call or put unless you are buying a UVXY LEAPS PUT at-the-money or deep-in-the-money) when IV% is high- you are virtually guaranteed to lose. If you want to BUY an option, wait for IV% to go low (ideally below 25%) in order to get the best price. If you must BUY CALLS, Don't buy UVXY calls... You are throwing your money out the window, unless you intend to day trade them into a spike. If you believe volatility is low and will increase, consider buying a VXX LEAPS Call (ideally in-the-money) - it will hold its intrinsic value far better if you are wrong, or if you don't sell at the peak.
5. Watch VVIX (volatility of VIX). It's not tradable, but it's easy to see what's happening--- if VVIX goes from 90 to 105 in a day (and contango fades to backwardation), I would be looking to unload VXX & UVXY long calls for a profit... Moreover, I would be watching for a VVIX peak and a reversion away from Backwardation when you can sell OTM VXX & UVXY calls and participate in a volatility crush... These are my favorite trades of all... Just don't sell too many calls, because if you are wrong, your margin will blow up in a wink... I suggest only deploying 25% (maximum) of your free cash to these trades... If you are wrong and you're assigned short, it can suck a lot of your capital, but don't panic if it happens- if you are assigned, just sell short puts (aka covered puts kind of like an upside-down covered call) at a strike below your cost basis until you are assigned long again (thus cancelling out the position for a profit--- ). The main thing is that you need to have enough capital to take assignment short and to potentially withstand UVXY quadrupling in price.... Yes, it will eventually crush, but your broker won't care- you will just get the dreaded margin call...
Lastly, one additional conservative measure I trade is buying a UVXY LEAPS PUT (At-the money and as far out as possible, during a VVIX spike). This is an expensive trade, and possible the only time I ever buy a VIX derivative option when IV% is high... Despite the apparent expense, the delta of this option will crush so hard (after a year or so) that it will likely be worth 2x its trade price... Once this happens, you can buy UVXY common (with shares equivalent to the number of puts you bought) and there's no risk... NONE... The trick here is to try and buy UVXY common when IV% and VIX are at a low... Eventually, when there's a VIX spike, UVXY will also spike (very hard)... Ideally, you want to sell your UVXY shares when VVIX spikes, but if you miss the top, just hold the shares... You can always exercise the put and still profit...
Hope this helps...
