UVIX: A Tail Hedge Idea

Because the VIX futures curve stays in "contango" (upward sloping) 90% of the time, UVIX naturally bleeds value through "roll decay." It should never be a buy-and-hold position. Traditional put options suffer from time decay (theta) and "premium squeeze." 2x Long VIX Futures offers a more powerful alternative because it can provide massive convexity—up to a 10x hedge ratio. To use this strategy successfully, investors must have pre-determined exit levels (e.g., selling at a 40%–60% gain). Because UVIX is mean-reverting, it will often give back all its gains quickly.