ProShares Trust Ultra VIX Short Term Futures ETF (UVXY)

[Porgie Tirebiter]

There is a cost of leverage, and that means the fund has to lose over time. Yes, UVXY is a catastrophe since inception. And that's typical of the bear side of leveraged ETFs. SVXY much less so, but despite the charts and the forward splits, it has lost value.

I don't follow your math in regard to the appreciation of $2.72 into $391,800. My math sees SVXY as having gained approx 870% since inception. 1,000 shares at approximately $45 gaining 870% would give you shares worth $391.50. Split that four times for today's approximate share price.

What distorts the SVXY return is that we are not taking into account the level of the VIX at the fund's inception. The last time SVXY was at the level it is now (August 2015) a single day spike in the VIX to 53 caused it to lose well more than half it's value. A few months later a more gradual spike to only 32 caused SVXY to lose another quarter of it's value beyond that. For most of the remainder of 2016 the relative calm of the VIX has let the daily resets push SVXY back up to hit a new all time high. But if the VIX environment was to return to the way it was at the funds inception (spending a couple months in the 30-40 area) I can guarantee you SVXY would be trading at all time lows, even counting splits. UVXY would probably be in the $30 range under that scenario.

Catastrophe is a word that can't be overused when describing UVXY. But right now it's SVXY, to me anyway, that is a scary place to be.