How much I should buy UVXY (Volatility Stock)?

Weijing Jay Lin
May 12, 2021

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Let say our total lose would be 5% and UVXY raise 25%, x as total value, and y would be the value we are going to buy in order so we have the equation:

(x - y) * 0.95 = y * 1.25
=> 0.95x - 0.95y = 1.25y
=> 0.95x = 2.20y
=> y = 0.95/2.2 x
=> y = 0.43x

So it will be almost 50%, but if the volatility much higher, eg in 2018, we have volatility over 300% in total, but the total decrease only 50% which means you can just invest 15% on UVXY, then it will balance out.

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Weijing Jay Lin
Weijing Jay Lin

Written by Weijing Jay Lin

A software engineer entrepreneur in San Francisco Bay Area.

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