The Wait for Decay

[frep, frep header, header, logo] April 20, 2024 Last week, I sat Tino down for a math lesson. If you don’t know my son Valentino “Tino” Sebastian, he’s 7, but he loves learning about what I spend 95% of my time doing outside of hanging out with my family - and that’s trading. He’s in that great stage where he just wants to be around you no matter what. [mark fam]Tino: Bottom left, UGG boots. I’m sure a lot of you have seen him come say hello to me when he gets home from school…I even let him pick stocks for us to check out a few weeks ago in the Delta Strike room. Last week, I was riled up about the UVXY Reverse Stock split and he wanted me to explain it to him. We sat at the kitchen table, and I got 5 apples out of our fruit basket and set them in front of him. Me: “These are your apples. There are five of them. They’re worth $2 each for $10 total. Now, when a Reverse Split happens, you’re going to lose a few apples, but what you have will STILL be worth $10 total, ok?” I reached forward and took 3 of the apples off the table. Me: “Now you have 2 apples, and they’re worth $5 each instead of just 2. See? Still a $10 total.” Tino: “I’m confused. I have less apples” Me: “Stay with me here - let’s say the apples split again.” I reach forward and grab an apple, leaving him with one. Me: “Now you have one apple, and it’s worth $10!” Tino: “But nothing happened to my apple, it’s the same apple...” …And he took a bite of it and walked away. If only he knew what a mouthful he said there! We’ve been talking about the April 11th UVXY Reverse Stock Split for over a week now. In fact - more accurately - I’ve been screaming about it from the rooftops to anyone who will listen. The “value” of UVXY has not changed, just like the value of Tino’s apples didn’t change. But there’s no arguing - there were less apples… And there’s less UVXY. The April 11th Reverse Stock Split was the 12th split in UVXY’s history. So if I did the full analogy with Tino, he may have a $10 stem left right about now. No one wants to own UVXY. That’s not groundbreaking. Everyone knows it’s a horrible asset with no true value over time and eternal decay. But because of that, people are scared of it. They don’t understand it. And when they don’t understand it, they’re not going to trade it. WE understand it. That’s why I’ve been writing about this - talking about it - taking questions about it for weeks now. I needed to make SURE you understand what happened on April 11th, what’s happened since then, and why you need to be there when we put on our UVXY position.  April 11th: The Skinny: - UVXY 1:5 Reverse Stock Split hit - UVXY price went from $6.91 to $33.55 What It Means: This was exactly what we were looking for, and it happened exactly as planned. So why didn’t we trade UVXY on April 12th?  Why We Didn’t Trade UVXY on April 12th: The Skinny: - The VIX jumped from below 15 to over 17, 2 full points in a day - UVXY price jumped from $33.58 to $37.85 - UVXY’s “value curve” flipped upside down on us [I walk through every step of this process live in this video - watch this.]( What It Means: I’ll sum it up for you with two lines. In the chart below, the green line represents the vol index, it was $17.12 last week. The blue line is vol futures, which is what UVXY owns, and it was trading at $16.65. The blue line should NEVER be below the green line. This is BAD = [uvxy bad] When this inversion happens, instead of UVXY losing value and Tino losing apples, it’s gaining value. This inversion would mean I’d actually have to HAND Tino a 6th apple…which is bad for us to trade. That’d be the same thing as you losing and paying your investment to the other side. We need the blue line to be above the green line - that means we have decay, and we need strong decay for this trade to work. This is GOOD = [uvxy good] Since April 12th when [this video was filmed](, UVXY’s decay has stayed “positive” - green line over blue line, which we know is BAD. That means it isn’t decaying - and you can see that in its price. It went up all the way to $41.10. That means we don’t want to trade right now. UVXY has moved within the $36 to $41 window for the last five days: [uvxy motion] But this week, it’s going to dip. I believe blue will move back above green - decay will set in … And we’re going to get our chance for a 100% win.  This Week’s “Wait for Decay” Truly, Reverse Stock Splits are gifts from the market universe. It’s like hunting a deer that’s been wounded… it’s an easier kill. Hunting a UVXY deer is like hunting a deer that’s already dead… but now I’m out here mixing metaphors so I digress. Your takeaway is: This opportunity is rare. VERY RARE. The last UVXY reverse stock split was in 2023, before that it was 2021 and before that 2018. THESE DO NOT HAPPEN OFTEN… and the inflation in price we’ve seen over the last 10 days from $33 to over $41 has only given us MORE ROOM TO FALL. This week I’m looking for decay. I’m going to make this trade, and I have around $15,000 across all accounts I plan to use to short UVXY’s fall over the next 4-6 months. It’s going to happen - and if you’re in Trading Desk or Option Pit Professional or 0DTE, you’re going to get the exact trade. The exact trade matters here. TIMING matters. Go out too far - you won’t make a high margin and it’ll be an expensive trade Don’t go out far enough - UVXY may not decay fast enough and you’ll lose The exact trade matters. If you’re not in… [here’s your last chance to join.]( 2 months for the price of 1 when you take our $499 offer. This lasts til Monday morning. I’ll see you then. [sig, mark sig, signature] Don't miss when our traders go live! 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