Bullish Case: A sudden geopolitical crisis or unexpected economic turmoil can spike volatility, pressing UVXY higher. Historical data suggests such events significantly boost demand for UVXY as a hedge, making it a potential profit source.

Bearish Case: If markets maintain stability and economic indicators remain positive, UVXY may continue to decline. Persistent contango in the term structure, coupled with low trading volume for calls, reinforces bearish sentiment.

Potential Outcomes:

• Market shock occurs, spiking volatility (20% chance)
• Stable conditions lead to UVXY decline (55% chance)
• Minor events cause short-term vol increases (15% chance)
• Unexpected rapid inflation decreases stabilize markets (10% chance)

Trading Oracle: Consider initiating a bearish credit spread by selling $22.50 call options and buying $25 calls expiring in 30 days. This strategy leverages ongoing contango for potential profits alongside high theta relationships while limiting risk. Monitor for hedging opportunities if volatility suddenly spikes.

November 17, 2024