SVXY and UVXY Leverage Slashed

Discussion in 'Options' started by mt2rules, Feb 27, 2018.

  1. mt2rules


    ProShares Slashes Leverage on Surviving Volatility Products

    Proshares came out with news last night that they are reducing the leverage of SVXY from -1x to -.5x and UVXY from 2x to 1.5x. This will have a major effect on these products, especially the options. Some of the longer term OTM options have declined 60%+. Any thoughts on this and how much this will change things moving forward?
    Last edited: Feb 27, 2018
  2. I find it very unsettling, if they are able to "redefine" what I own retroactively!
    Hooter, i960 and cole_ like this.
  3. SteveM


    All I know is that over the long run, both SVXY and UVXY holders will both be losers - only difference is that now the money will grind out of their accounts at a slightly slower pace.
    zdreg and Clubber Lang like this.
  4. Doesn't matter at all really, unless you owned options.

    Are ya'll math impaired. ?

    If you don't like it , just sell. No loss

    As for the options losses, anytime you own anything but CASH , you are at risk. Period.
  5. lindq



    XIV and SVXY, rest in peace. You were great fun while it lasted.
    Last edited: Feb 27, 2018
  6. It depends, these raised like rocket when xiv dropped to almost zero in few minutes.
  7. they reduced the SVXY leverage to prevent an XIV meltdown. Not 100% , but much less likely to implode.
  8. JSOP


    I don't know why they chose to do that. Not only this impacted the value of the options, it also impacted the potential profit potential of these products. These products were created as a hedge to market volatility in the wake of the 2008 financial crisis. What's the point of using them as the hedge now if it's not going to be potent enough to offset any potential financial crisis? All they have to do is remove the Termination Clause if they were worried about a meltdown like XIV. What killed XIV was the Termination Clause. All those Volatility products are supposed to trade like stock. Well if they are stocks, then act like them! If stocks can have 0 value and don't terminate until they have value of 0, so should those volatility products.

    And besides what happened to Reverse Split/Split that they always do to adjust the value of these volatility products? Once their value dips to a certain value, WHY haven't they done the reverse split/split yet? And WHY couldn't they do the reverse split on XIV when the value dropped significantly? In SVXY, the reverse split is long overdue btw.
  9. JSOP


    With less profit potential on each trade of the underlying as well and I just thought another side-effect of producing more FINRA fees on each trade now that traders would need to trade more shares to replicate the previous profit. Bottom Line: More $$ for the Big Boys and screw the traders.
  10. "All they have to do is remove the Termination Clause if they were worried about a meltdown like XIV."

    Lol, classic ET
    #10     Feb 28, 2018
    MoreLeverage likes this.