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Wait for the VIX to drop to sell calls.
I'm short a number of $85 calls, most of which are tied to $80/85 spreads. I have a host of credit put spreads up to $95 in January as well and fully expect those to losses.
It may be best to sell calls to leg into spreads to minimize your losses once the VIX drops back down. If we drop to 12 before November expiration its not unreasonable to expect a 25% jump in SVXY. I'd wait for that and then reevaluate but consider selling just higher calls against your long calls to reduce losses. If you have the margin a ratio call spread may not be a bad loss strategy as well.
Ask me again when the VIX drops <13. Now is not the time to do anything but wait and see how things will play out.
If we assume a best case reasonable scenario of VIX dropping to 12 and staying stable with reasonable contango until January expiration it will be very hard to see higher than $90 at January expiration. I would be thrilled with $85, with a more reasonable target of closer the $80, obviously assuming depressed volatility until then.
Glad you continue to contribute oh so much to this board.
If you've got such a problem with this country you're more than welcome to leave. Literally no one is stopping you.
I'm still roflmao about fluoride... And now you add aspartame and GMO's too! Haha.
Trying to time a spike is very dangerous and almost guaranteed to lose. Might as well go to Vegas and play the slots
America is a police state, the market's are rigged, Obamacare is a success, and Obama himself is the leader of ISIL.
What other conspiracy theories do you believe?
Its not my opinion. TVIX WILL continue to asymptotically approach $0. May we get a temporary spike? Sure, its possible. But unless we enter a true bear market very, very soon any spike will be short lived and TVIX will crash back down. If you don't understand this I suggest reading the prospectus.
I expect TVIX to trade 17-22% lower at Sept expiration.
No. There is no such thing as support in derivative ETFs. Contango is steep. If the VIX stays low TVIX could easily lose 15% in the next few weeks.
No not necessarily. It increases when large movements are expected in the underlying, and after large swings have taken place (read up more on HV vs IV for more info). This makes buying puts after UVXY spikes more expensive. So since you paid extra premium for your put buying when IV is high you want to sell before IV drops back down. This will happen as the "dust settles" and the VIX stabilizes.
I would hold until the week AFTER August futures expire (ie hold till next week). That way the movement of UVXY and SVXY will be based almost exclusively on the new front month future, which will track the movement of the spot more closely. So if you're expecting VIX to drop as low as 12 by next week as I am, hold until then. Once contango takes back over moving the price we will go back to the slow and steady decline, implied volatility will collapse, and you'll have missed the best opportunity to sell your puts before expiration.
Yes I was just typing a message about that. While the absolute theta on your position is low (long dated option) it is useful to compare how "expensive" delta is based on delta/theta ratios. As you have realized, strikes that far out of the money require paying more theta for your delta which makes them more expensive to hold.
Why stop at $13? I'll sell you as many $9 puts as you want for $.25
Lmao at fluoridated water...
Sorry you lost some money trying to time a market collapse. Much easier to blame it on the Fed than to admit you were wrong.
If QE is the only thing holding up this market (which current bond purchases are at a trivial level compared to their zenith) then I hope you're buying November puts on SPY!
But the problem is you have really low delta and high theta so by the time we get that low you option will be worth similar (or lower) than what it is today. I would strongly recommend selling for profit and spending some more time learning about options and paper trading to get a better feel for how options are priced and how they move based on the underlying.
Rofl.
And big brother monitors your every word through the Facebook messenger app.
I agree with your assessment TR
We're not even in backwardation yet. There's still 0.3% contango between the front and back month futures. As long as we don't slip into backwardation from here, you're fine
A LEAP is an option that generally expires more than a year (so Jan '16 for SVXY/UVXY). For all practical purposes however I often consider >6 months to expiration as a shorter term "LEAP".
Nothing wrong with being aggressive, just too much risk for my taste. Especially for the reward.
You're brave lifter. That's more risk than I would like to play. Not saying you made a bad trade, and it will likely win, but now is not the time to sell ATM weeklies. Now is the time to sell ITM or ATM LEAP puts instead. Much safer in these conditions with excellent returns. If you want to reduce margin requirements and limit risk then selling credit put spreads or buying debit call spreads in these conditions can be even more appealing.
Good plan lifter
Put spreads for a credit in SVXY are fine if that's the flavor you prefer. Almost always however a debit call spread will provide the same risk with better reward.
An easy way to enter a LEAP spread is to wait for a dip, then buy an ATM call and sell an OTM call at a strike close to the recent high. For example, if we get fortunate enough to dip to say $77 from here, then buy a Jan $77 and sell a Jan $87. You can probably enter that spread for around $4.2-$4.5 in that scenario, which leaves you greater than 100% profit if SVXY simply recovers to its previous high.
There are obviously more complex strategies and different strike combinations that can be more profitable but that is the simplest way to put on this type of trade.
I don't really think THIS reply was necessary...
Don't bite the hand that feeds you, learn from your mistakes, do your due diligence before investing, and don't be a sore loser.
I mean seriously... Do you go to Vegas and expect to come back ahead???
TVIX is far from a POS. It performs EXACTLY as it was designed. You can't blame the fund for your ignorance.
Congrats lifter, looks like you've been making some very profitable trades.
I would recommend continuing to keep lots of cash reserves, and consider parlaying some of your profits into LEAP spreads on SVXY that return >100%, particularly after any significant dips. Its a good way to double your profits with reasonable certainty without increasing your risk.
But of course I do, Doc! And it allows me to keep growing my portfolio WITHOUT having to continually add new cash.
Ya lifter there is. But posts can only be stickier within 48 hours I think. And all the stickies we had Eric so kindly removed.
You're kidding... Right?
Haha... You're right. I don't know what I'm talking about. In fact, I don't know anything about SVXY or options. But you do. Clearly.
Obviously you don't understand how options work...
Nice trade with a good breakeven. Should play out nicely for you.
I like $70 as a short leg and would have my long leg as the lowest strike that would return at least 100% on the spread. For example, if you do $60/70 then your cost basis should be less than or equal to $5/spread. Then I would consider closing when SVXY is greater than $70 or your spread can be closed for 80% of profit potential. In this example I would place a good till cancel order to close the spread at $8.
There's not really a great way to set up a spread with that position at this point. Risk/reward even with a $60/70 just doesnt make sense. I would sell got as close to breakeven as possible. Contango has deepened again which will easily allow you to breakeven or even make a little profit if it persists.
Not sure what you mean by that...
Weekly prices are more difficult to predict because the fund is based on monthly expiration cycles.
SVXY will reach at least $80 by January, with very reasonable certainty. I would consider some $60/80 spreads if you're looking for a safe bet with an excellent return potential. I'd consider selling when that position doubles, or when SVXY reaches $80.
It's all part of the game lifter - I'm down for the year as well. 33% from my highs in mid January. That being said, I've got positions with little additional risk that can potentially recoup those losses before June. Its all about risk management and exposure - ESPECIALLY with options.
The people I would read are Nat Stewart, Bill Luby, and Russell Rhoads.
Aw man, you would have been in a great position if you had bought those SVXY spreads right now! As it sits I'm afraid you'll be out all your premium. I'm hoping for an SVXY of $66, but again this month I can't see it getting signficantly higher than that.
Buying more SVXY on dips is not a "bad" idea BUT you have SIGNIFICANT risk. The major time buying SVXY is risky is during extended backwardation, which is precipitated by large drops in SVXY. Basically the only times profit potential on SVXY is extremely high is when risk is extremely high as well. And covered calls offer little to no protection from that risk.
Buying a debit spread on large dips instead helps you capitalize on the reward while limiting your risk to the premium paid. While IV is high during these times (which makes put buying on UVXY very expensive) you can offset that by selling a higher leg. For example, I bought March $59.5/$61.5 spreads for $.80 (max return of $2) and $61/$65 spreads for $1.9 (max return $4). Both of these positions return over 100%, and I can leverage my exposure and limit my risk via options (ie, the point of options to begin with).
Just a thought - covered calls offer reasonable profit, but little to no risk management and protection. This is especially true in an ETF like SVXY that can commonly swing 5+% in a day, and when it drops could potentially lose up to 95% of its value. That being said there are stock repair strategies using options if that happens, and I'd be happy to help you with that as well. Its all about evaluating the risk benefit of a trade and going with what you're comfortable with.
As always, let me know however I can help.
So how did you play it???