We have discovered that the BullVix Active‘s trades are subject to the US Internal Revenue Service’s (IRS) Wash Sale Rule (see Investopedia). The rule is only applicable to US investors. Under the IRS Rule, should an investor or trader repurchase a security, for which he or she has taken a loss within the prior 30 days, the taxpayer can no longer claim the earlier loss.
Based on this discovery we recommend that all individual US investors and corporations DO-NOT trade the BullVix Active. Individuals and Corporations should instead trade the BullVix’s BullVix Hold or the BullVix Call Options signal sets. The Wash Sale Rule is not applicable to these two strategies.
US individuals and corporations, who utilize “mark-to-market” instead of cash accounting under IRS guidelines for their securities transactions are exempt from the Wash Sale Rule. However, its strongly recommended that the exemption not be utilized before getting advice from a CPA. Paper profits for all of the other securities held could be subject to the same mark-to-market tax at the end of a tax year. This could include those securities in which have long-term capital gains that have not yet been harvested.
The BullVix Active does not work for US individuals and corporations for the following reasons:
- Has a win ratio of 60% meaning that losses occur for 40% of the trades.
- Multiple long (VIXY) to short (SPY) trade alerts are issued each month. There is not any period throughout the history of the BullVix or the Bull & Bear Tracker in which an alert remained in effect for 30 days.
The VXX/VIXY long and the SH/SPDN short combinations should not be utilized since the Wash Sale rule is applicable to similar securities. Note. Call options are not similar securities.
If you are now holding the UVXY, VXX, or VIXY and have a loss it is recommended that you do not sell the position. Should the position be sold and the same security be repurchased within 30 days the loss would become unallowable. You should instead subscribe to the BullVix Hold and follow its instructions for when to sell your position. If you are not going to trade the BullVix Call Options you should also consider to average down when the BullVix sends it next alert to buy the VIXY and UVXY.
The table below depicts the buy and hold gains for the VIXY versus the S&P 500 for the three previous VixVortexes. The table also depicts the gains from the VIXY’s low during the VixVortexes. Based on the data in the table below and the explanation provided in the VixVortex clip from the webinar recording the 2020/2021 VixVortex is similar to the 2017/2018 VixVortex. The lows for both occurred well after their VixVortexes began. The 2018/2019 and 2020 lows for the VIXY occurred shortly after the VixVortexes began.
Given the Wash Sale Rule and especially the BullVix Algorithm’s new 5-day rule (view, BullVix Call Options clip) the BullVix Call Options signal set is the ideal vehicle to generate significant gains during the current VixVortex. BullVix Call Options should be able to produce handsome net gains while waiting for the spike in the VIX. The gain from the spike could easily be 1,000% or more.