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How Does BITX, Volatility Shares’ 2X Leveraged Bitcoin Strategy Fund Work?

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On June 27th, Volatility Shares introduced BITX, the first 2X leveraged Bitcoin Exchange Traded Fund.  This post will review BITX’s architecture, operational characteristics, likely risks, possible rewards, and potential trading strategies.  A simulation of BITX back to 2014 provides some data on how this Exchange Traded Fund (ETF) might perform in the future. Before we get into the specifics of how BITX works, I’m disclosing …

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How Volatility ETPs Really Work TL;DR

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The short-term Volatility ETPs hold a mix of the two nearest-to-expiration VIX futures. The ETPs are either long both of those (e.g., VXX, UVXY, UVIX, VIXY) or short both of those (SVIX, SVXY).  If the VIX futures term structure is in contango, with prices increasing with time, then the tendency will be for both futures to drop in value on a daily basis–so a long ETP …

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How Does the Cboe’s VIX1D Work?

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The Cboe is just dribbling out information so far (30-April-2023), on the new one Day VIX (VIX1D), but so far the evidence supports the following guesses: So far, the Cboe has released 1 year of backtest data for the VIX1D (VIX1D dashboard), but even that little snippet of data confirms that this extension to the VIX family will expand its general ability to confuse people. …

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Estimated Next VIXY Reverse Split: June 23, 2023

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For a security doomed to decrease in value over time, ProShares’ VIXY does amazingly well.  Its volume averages over 8 million shares per day and its assets under management are currently around $270 million, not bad for a product that has averaged a 52% annual loss since its inception in October 2011. This works out to an average loss of almost 6% per month. See …

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How Does Volatility Shares’ -1X Medium Term ZIVB Work?

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This post will discuss how ZIVB works, including how it trades, how its value is established, what it tracks, tax treatment, termination risk, likely liquidity, and performance simulations.  Volatility Shares’ new -1x Short Mid-Term VIX Futures ETF (ticker: ZIVB) started trading Wednesday, April 19th. After a gap of over two years, volatility traders have access to a -1X leveraged mid-term volatility ETF. ZIVB’s Prospectus is …

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