Why do we watch the UVXY in MACD Divergence

The UVXY, or ProShares Ultra VIX Short-Term Futures ETF is more sensitive than the VIX and really designed to track short-term volatility in the S&P 500 Index. The sensitivity is a consequence of its 1.5x leverage. This makes it ideal for the Options Hunter MACD Divergence trading strategy.

 

This instrument gives us a warning on potential changes in the direction of SPY. Together with the MACD divergences on our shorter time frames the UVXY provides  another tool for us to find OTM options with divergences on the shorter-term time frames.

 

Here are a couple of charts from May 30, 2023. These 10-minute charts of UVXY and SPY show the extra lift the change in direction on UVXY brings to the SPY.

 

 

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