Volatility - UVXY
Idea for UVXY:
- Mistakenly closed previous position too early, but at least it gives more confirmation in the thesis.
- DXY continuing its ascent, causing macro bearishness.
- Efforts to break above 200D SMA on SPX continuously rejected. Waited for an SPX below the put wall at 4350 "to be sure".
- There is risk in short positions pre-CNY, but there is a Quality stop above 200D on SPX. We already had a bit of a bounce off 500D on Russell, but it is fading.
- Federal tax event - liquidity sinkhole Feb 15th. Along with the QE Taper, this should be a systemic liquidity drain.
- GDP was a "beat" but the components do not look appealing. GDP Sales (minus inventories) shows far less structural growth than suggested. IMO it is the peak of the business cycle, and earnings will only drop from here, due to hawkish Monetary Policy.
- Shadow rates spiking and real rates about to be hiked.
- Yield curve inverting.
- Volatility begets volatility. Widening ranges suggest further volatility spike to come.
In conclusion - worth it to try a long Vol position here and have some conviction (with a reasonable stop-loss).
Long UVXY 19C Feb 18 (4.20 debit)
GLHF
- DPT
- Mistakenly closed previous position too early, but at least it gives more confirmation in the thesis.
- DXY continuing its ascent, causing macro bearishness.
- Efforts to break above 200D SMA on SPX continuously rejected. Waited for an SPX below the put wall at 4350 "to be sure".
- There is risk in short positions pre-CNY, but there is a Quality stop above 200D on SPX. We already had a bit of a bounce off 500D on Russell, but it is fading.
- Federal tax event - liquidity sinkhole Feb 15th. Along with the QE Taper, this should be a systemic liquidity drain.
- GDP was a "beat" but the components do not look appealing. GDP Sales (minus inventories) shows far less structural growth than suggested. IMO it is the peak of the business cycle, and earnings will only drop from here, due to hawkish Monetary Policy.
- Shadow rates spiking and real rates about to be hiked.
- Yield curve inverting.
- Volatility begets volatility. Widening ranges suggest further volatility spike to come.
In conclusion - worth it to try a long Vol position here and have some conviction (with a reasonable stop-loss).
Long UVXY 19C Feb 18 (4.20 debit)
GLHF
- DPT
Trade closed: stop reached
