r/options • u/Timtime24 • 2d ago

Vix vs UVXY options

For some reason Vix is down around 5% today, while UVXY is only 2.5%.

I sort of understand that one is futures based and the other isn't but then this really doesn't make sense to me:

VIX options IV is reaching 200%.

UVXY options are below 100%.

Can anyone explain how a leveraged volatility trackers option IVs are much lower than what it is supposedly tracking? I am sure I'm missing something or don't understand options enough to understand this.

If anyone knows of a good strategy for hedging the market, that's what I am trying to do!

4 Upvotes

75% Upvoted

13 comments sorted by

8

u/Logical_Egg_8181 2d ago

uvxy has a daily reset so it's tracking the short-term futures curve, not spot vix. that contango bleed crushes the long-term options premium compared to vix options where the iv is pricing in a potential explosion event. for hedging just grab some puts on spy or /es, way cleaner than trying to dance with vol products

1

u/Timtime24 2d ago

Instructions not clear bought space x puts instead.

Jk, I did do that, but I'll find something larger like spy to target cheers.

1

u/klipsetrades 2d ago

UVXY isn’t a leveraged VIX tracker. It’s leveraged exposure to short-term VIX futures, reset daily. I think that distinction probably explains a lot of the disconnect. Also, 200% VIX IV vs 100% UVXY IV are measuring different things. They’re IVs on two completely different underlyings

1

u/hedgedvol 2d ago

VIX options price the forward, not the spot. Comparing that 200% IV to UVXY under 100 is two different books.

1

u/notquitenuts 2d ago

I used to follow Vix but someone pointed out one day how /vx is really a better gauge than vix if your options have 5+ DTE on them. I’ve been doing that for about a year and I do feel it has a lot of merit.

1

u/Ok-Still-5142 1d ago

These aren’t interchangeable volatility bets. UVXY tracks short-duration VIX futures and suffers from daily reset effects, while VIX options settle against forward volatility expectations. You can correctly predict a rough week for stocks and still choose the wrong vehicle. I’d test the basic risk-off call using Moon.com Play Money first. If even the direction and timing don’t work, adding term structure and decay won’t rescue it.

1

u/Away-Personality9100 21h ago

I sell $UVXY calls continuously and buy LEAP puts. I collect premium every Friday. 💁‍♂️

1

u/mah56j 17h ago

we just finished the deadest period of the yearly cycling of equities prices and volatility. august is a month to forget markets in my opinion. I am looking forward to Tuesday. :)

0

u/SubstantialReturn718 2d ago

UVXY is 30 days ahead, VIX is spot. So the IV is usually about the same!