[USER]

Ok what do you know about UVXY ?? My spouse is now telling me we will owe $70k as a tax liability associated with an open short position in this E*Trade account ???!!

Someone please tell me what this means as I am clueless.

Is this a risky stock to begin with ?

He said it was a hedge fund for 10 years ?

How did this happen that there’s all this tax liability ?

[Damon]

How much did you make on the trade?

[Patrick]

Shorting UVXY means that your spouse expects market volatility to decrease.

The ETF attempts to return 1.5x of VIX on a daily basis.

So if VIX drops 10%, then UVXY should return +15%. Is it risky?

Very much so.

The good news is that a $70k tax bill means the trade made quite a bit of money.

[Frank]

It is an ETF that speculates in volatility futures. Usually people would trade in and out of something like this, because its akin to gambling.

But yes, if he has been short this, it would have generated a lot of returns and corresponding tax bills.

[Spencer]

If I understand what you’re saying, it could be the result of a profitable trade anywhere between approximately $200k-$500k depending on whether it was short/long term gain and what your tax bracket is.

[Author]

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