ProShares Trust Ultra VIX Short Term Futures ETFArca
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Price Action has been erratic af since it broke out late Jan.
Lookin like a giant 3M coil.
Let's see.
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Well that escalated quickly... got our green line break and came to rest exactly on the Up Megaphone bottom (now yellow for easier viewing).
Everything aligning to March 10th about right where we'll get our volatile red line X...
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Pretty ironic when volatile Price Action doesn't increase volatility, guess it's a tad slow and inconsistent for UVXY, but I'm digging the coil theory here. The tip should move up pretty slowly as it's wound tightly with lots of tension... until it snaps (red line).
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This is the FW to watch...
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GL ALL
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That FW played out nicely...
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Hit our buy zone, only time can tell how this will play, should still have another spike due this month...
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Ok here we go, this red fractal has been highly reactive. Last X took a couple weeks to take shape but resulted in the last $15 spike from $9 and before that we spiked from $15 to $23 on X...
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Odds of this spike working out getting longer, market breadth quashed volatility on the last drop, global markets are technically extremely stable right now until the very second they are not...
This always goes down the moment the indicators show it'll bounce. You will make so much money on UVXY ETF if you buy Put options. The conrtango and fees alone should make you rich on your VIX puts
ProfitHarvest
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@WizdomSeekerr, Profiting from UVXY decay is the easy part.
And of course I sell the out of the money put options and outrun time decay, trading out on any bounces upward.
I like selling insurance and exiting on the upward bounce. then back to theta erasing the puts I sold in the last 30 days and likely trading and rolling in the last 2 weeks.
To wit... the April 1 $7 strike was $50 per contract 8 day ago. If the price of the common is the same in 2 weeks a $7 strike is worth $11.
Same thing over and over and yet so many will buy the common as a lotto ticket and help force up the price of the common a bit.
Fellow gladiators... We who are about to die salute you!
all the best...
ProfitHarvest
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@Spotshooter1983, The trick is knowing when it's most likely to turn either direction...
cleanartist75
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@ProfitHarvest, Excellent charts! What is your UVXY max target ........the late Jan. high of $15.33 or maybe up to $20?
Actually I sell the puts that are at least 20% below the current NAV. I sold the $7 April 1 strike. For me to lose money the stock would have to be put to me below $6.50. therefore I win if it is downward based on the internal loss of NAV and ProShares management fee. These little bumps upward like today just make it less likely that these will be in the money in 30 days. VXX trades downward at 4% to 8% monthly without the spikes. UVXY at 8% to 12% monthly. This is the decline in NAV based on the cost to buy more expensive forward contracts and buy back the wsting assets in the portfolio absent a spike in current month volatility. SPY has only had 4 declines for the last 276 months that were more than 10%. I can game that.
As they say on infomercials... But wait there is more...
T he key to what I do is to out run theta to the downside and reap a profit. If the stock is at $7 at expiration I have gained $50 on $6.50 in one month. OK but not great. However, the time value decay makes this a $9 contract in another week if UVXY common declines to the low $8 range again. If it goes up it sold at $8 sooner for something I was paid $50 last week.
My goal is to get paid and have theta work for me. It is great when these bumps happen like it did today. If the common had gotten to $11 these puts would have been $9 to $13 per contract and I would have bought them all back today. Since it did not...tick tock... If UVXY is still above $8 it will be fine to close out in two weeks. WEatch the time decay and if UVXY is above $7 puts approach worhless very quickly in the last 21 days of the contract period. theta works in my favor.
Look at the $7 strike puts for two weeks from today and you will see the time value erosion. the closer an option gets to expiring out of the money the bigger the gain for the put seller.
I can game that without guessing direction. I just watch it play out.
I just watch the time decay and If I am above the strike price with 21 days or less to go I roll forward and downward the strike price keeping in mind the concept that I want ot be selling the cash secured put that is 20% below the posted NAV and one strike lower. Currently the $7 strike put.
Is this the sweet spot to trade out?
Sure looks like it...
I'm faced with good if UVXY declines and helps theta work and then great or better if this spikes. I like to hold over a weekend - the world gets crazy sometimes on a weekend.