Top of the 'morning, mates:
Stinger writes: "Also, a VIX of 40 still wouldn't necessarily give you the $16 you seek"
Okay, c'mon, let's give Truthie a wee bit of a break and help him/her with some math...
Actually, I think we need to be completely transparent and honest as well.
Stinger, please correct me if I am incorrect...
Using VIX as a "proxy" for the futures that UVXY actually tracks, for each % age change of distant VIX, one can project double that for UVXY. For minute to minute or day to day, one must calculate from futures as I demonstrated yesterday.
Hence, if I project that there will be zero contango as VIX (and relative futures) increase 10%, VXX sould increase 10% and UVXY. 20%.
Then if I project that VIX increases 100% from 13.2 to 26.4, perhaps VXX might double to 39 and UVXY quadruples actually to 28! (close, but they won't). THOSE NUMBERS ARE ABSENT CONTANGO AND LEVERAGE DECAY.
BUT let's let contango and decay work until September. Let's let Uncle Ben print money and converted rice and let the penicillen work on the neuro-syphillis of the boy-King of the North.
The VIX. oscillates between 12 and 14.5. Contango remains between 8 and 13%.
Where does that leave us??? (adding in decay)
Well, that leaves us with, absent the inevitable reverse split, a UVXY between 1.2 and 2.9. Yes, Truthie, those are the numbers my black box gives me.
Stinger, what does your model say???
So, what will it take to grow UVXY from 2.0 to 16 from 13?
Yes, exactly 40. So, I will give you until September for that VIX! (closer to 60 for the lowest target)
After that, the ante continues to grow exponentially.
Quite frankly, your safest hope to see a UVXY of 16 is to not look at the chart again until several months AFTER the RS takes it back to 32...
Happy huntin today, Truthie.
"Learn yourself" about futures, contango, and what you are up against. And think about the DARK SIDE!
Doc
