fuzzballl 8:28 am on Monday, October 24, 2016

Thoughts on this tweet?

Jeff 11:44 am on Monday, October 24, 2016

I’ve never really figured out why the inverse volatility ones (XIV, SVXY, ZIV) have a downside bias. They are not double or triple, so it seems to me they should be up.
- fuzzballl 11:49 am on Monday, October 24, 2016
  
  First thing that caught my eye about that tweet was the start date of his data. Seems pretty random and happens to coincide with a near all time high in XIV. Of course it could be down a little from there. If he’s trying to say to short ’em all including SVXY and XIV he’s in for a rude awakening I think. Obviously a CFA that’s not as intimately familiar with these products like many of us here are.
  - jsd501 11:52 am on Monday, October 24, 2016
    
    I don’t see a downward bias but there is a timing issue. On the SVXY if you bought or was assigned in February and held until now it is in an upward trend. I seems to me that it just depends on the volatility spikes.
    - fuzzballl 12:01 pm on Monday, October 24, 2016
      
      Exactly. Timing is everything. If you look at his Twitter feed he keeps talking about buy and hold (VXX and XIV). Might work in other underlyings but not these. I tweeted back trying to get an answer on why he chose such a random date for his “analysis”.
      - jsd501 12:04 pm on Monday, October 24, 2016
        
        If one had bought the SVXY near the lows in February, you would be up by about 170% as of today. I admit I am cherry picking but if you wait for those spikes, it is very profitable.
        
        Jeff 12:25 pm on Monday, October 24, 2016
        
        SVXY should be above the 2015 highs if it didn’t have something that was pulling it lower.
        
        fuzzballl 12:29 pm on Monday, October 24, 2016
        
        True. I guess we should look at it as an upward bias but just not as upward as UVXY is downward due to slight drag even to the upside.
        
        jsd501 12:45 pm on Monday, October 24, 2016
        
        Yes, there seems like there is something pulling or holding it back.