UVXY ETF

Volatility has been rising due to election seasonality, but I believe it may be peaking with the U.S. presidential election in two weeks. The UVXY ETF, which provides 1.5x leveraged exposure to short-dated VIX futures, suffers from 'volatility decay' and is a near-perpetual short candidate due to its structure. The current backwardation in the VIX curve has temporarily benefited UVXY, but post-election, the curve should normalize into contango, resuming UVXY's long-term decay.

Market sentiment remains bullish despite geopolitical issues and economic uncertainties. October is historically volatile for the stock market, and there's potential for a correction as election uncertainty peaks. UVXY offers short-term trading opportunities for investors expecting a potential increase in market volatility.

The S&P 500 has recently dropped below trend support and is facing its biggest decline since October of last year. Volatility is on the rise, with the VIX possibly hitting 21. One potential short-term trading opportunity to capitalize on a market downturn is the ProShares Ultra VIX Short-Term Futures ETF.

China's Manufacturing PMI fell unexpectedly in December, indicating potential macro risks as we kick off 2024. The S&P 500 is near its all-time high and overall volatility levels are very low ahead of key macro data and the Q4 earnings season. January is typically a strong month for the VIX, so being long UVXY for a short-term hedge could prove wise in my view.

The ProShares Ultra VIX Short-Term Futures ETF is highly leveraged to short-term volatility but suffers from volatility decay and contango decay and is not suitable for long-term portfolios. However, UVXY has historically delivered incredible returns during times of stress, such as the early days of the COVID pandemic. The ongoing Israel-Gaza war could escalate and have important implications for oil prices and volatility, making UVXY a potential hedge for investors.

Shorting or making outright directional bets on the stock market can result in losses even if you're right. ProShares Ultra VIX Short-Term Futures ETF is a leveraged exchange-traded fund that aims to profit from short-term volatility, but it is incredibly dangerous. The UVXY ETF has a track record of poor long-term performance due to the structure of the VIX futures market and daily rebalancing.

The ProShares Ultra VIX Short-Term Futures ETF is not a good long-term investment, despite its potential for dramatic short-term gains during market stress, due to its return of -83% since inception. The UVXY ETF's poor performance is due to the constant decay of VIX futures in its portfolio and the daily rebalancing to maintain 150% exposure. While the VIX Index is currently low, investors are advised to resist the temptation to bet on a rebound in volatility via the UVXY ETF.

The Volatility S&P 500 Index (VIX), tracked by the ProShares Ultra VIX Short Term Futures ETF UVXY, and other tickers, bounced slightly on Friday, which Benzinga pointed out was likely to happen on Thursday.

The Volatility S&P 500 Index VIX, tracked by the ProShares Ultra VIX Short Term Futures ETF UVXY, and other tickers, has plunged over 10% since June 1 after losing critical support at 15, which Benzinga pointed out was a possibility on Monday.