A Boutique Hedge Fund with Huge Upside

Location: Dallas, undefined

We are a boutique Hedge Fund that invests the following way: Vixed Hedge’s Winning Strategy Put simply, the goal is to short the common shares of UVXY, VXX, and VIXY (Go long SVXY) when the VIX pops. The VIX is a called the volatility gauge for markets, but you can only short it through options. UVXY, VXX, and VIXY are all ETF’s that try to track the VIX, but suffer from contango/roll yield due to their structures. They lose money trying to track the VIX. They always head to zero because of how they’re structured. In order to keep these ETF’s on the indices, the owners continually reverse split them, to keep them from actually going to zero. Understanding the goal of our Fund, below is the historical performance, by year, of the VIX, UVXY, VIXY, VXX, and SVXY. Again, the goal is to only short these ETF’s when the VIX spikes, and then ride it back down to a new low. Frequently Asked Questions: 1.) How often is UVXY in contango/roll yield? a. About 80% of the time. 2.) What happens to UVXY when it is in contango/roll yield? a. When UVXY is in contango, its value decreases over time due to the structure of VIX futures. Here's what happens: b. Daily Roll Process : UVXY holds a mix of VIX futures contracts with different expiration dates. Each day, it sells the expiring near-term contracts and buys longer-term contracts. When futures are in contango, the longer-term contracts are more expensive than the near-term contracts. (80% of the time) c. Buying High, Selling Low : This daily roll process means UVXY is essentially buying high (more expensive longer-term contracts) and selling low (cheaper expiring contracts), which leads to an inevitable erosion of its value. d. Cumulative Effect : The impact of contango is cumulative, meaning the losses add up over time, especially during periods of low market volatility when the VIX remains relatively stable. 3.) After making an all-time low, what is the largest increase by percentage that UVXY has spiked? a. The largest percentage increase UVXY experienced after making an all-time low was 57% on March 16, 2020 , during the COVID-19 market panic. This was a significant spike driven by extreme market volatility. (Sourced from ChatGPT) 4.) What is the average yearly return for UVXY since 2011? a. -68.91% 5.) If you just shorted UVXY with $1,000 in 2011 and left it until now, what would your return be? a. $31,000 6.) Why can’t you do it as a retail trader? a. It is challenging for retail traders to short UVXY. Here are a few reasons why: b. High Demand for Shorting : UVXY is a popular target for short sellers due to its historical performance and volatility. This high demand can make it difficult to borrow shares for shorting. c. Limited Availability : The number of shares available for shorting can be limited, especially during periods of high market volatility when many traders are looking to short UVXY. d. Margin Requirements : Shorting UVXY typically requires a margin account, and the margin requirements can be quite high, making it less accessible for retail traders.