I’m waiting for someone to comment on this talking about a “gamma squeeze” without knowing what an authorized participant is 
https://twitter.com/iv_technicals/status/1360359579876528128 …
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in case you don’t know,
$UVXY is not driven on supply & demand, the price is derived off of VX futuresShow this thread
Hey man, I’m afraid you’re wrong on this. When there is strong demand for UVXY shares they start to trade slightly above NAV. That incentives APs to buy VIX futures in the market and deliver them to the ETN sponsor in exchange for shares of UVXY which they can then
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sell for a profit (at the higher-than-NAV price). The AP activity (buying VIX futs, selling UVXY) pushes up the prices of VIX futures and pushes down the price of UVXY but because UVXY started off at a premium, the net effect is that the prices of both VIX futures and
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UVXY are higher than they were before the process started. Demand for ETN shares pushes up the price of the constituents in exactly the same way that demand for ETF shares pushes up the price of the constituents (or demand for stocks increases stock prices etc)
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Great thread, very informative. But now I’m going to embarrass myself with a noob question... what’s AP?
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Authorised participant. Someone who can create or redeem shares in an ETF or ETN by buying the basket of constituents and delivering it to the fund in exchange for a new share (creation) or delivering a share to the fund and receiving a basket of the constituents (redemption)
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