Not many stocks can go from 8.55 to 1400 to 3.85
Yo Pit Crazies,
Newsflash: One of the most fun trading products is the Proshares Ultra Short Term VIX Futures ETF (Ticker: UVXY).
When I say it went from 8.55 to 1,400 to 3.85 I am not kidding.
That was the ride in 2020 to 2023.
UVXY 5-year chart after several stock splits
UVXY is due to split 10 for 1.
Click here to see what that means for you.
Historically UVXY Splits and That Is A Great Shorting Opportunity
I say this because there is little fun in shorting a $3.85 stock.
Even if the VIX futures rise 20% in value, that only pushes UVXY up $1.00. At this rate VIX would have to go to 24 for that to happen. That is a big push.
Once UVXY splits, traders aggressively short it more because of its properties of daily relentless decay.
That decay turns into relentless gains once the VIX futures go into backwardation, because the everyday buying and selling of futures prints money. Contango, like we have now, crushes UVXY.
Once UVXY splits, it gets more bouncy because of the active short interest. That also puts some pressure on the VIX futures if there is a real vol event like the Volmeggedon of 2018. The split adds to the action.
This is one of just four trading set-ups we are using on The Trading Desk.
And one of them may just mean generational profits.
The Rundown
Win the Week
Gamestop Corp (Ticker: GME) Apr28 20.5/21 call vertical spread closed for a 27% gain
To Your Trading Success,
AG