SPY and UVXY a pairs trade for a Ukranian invasion
There is better than an 80% correlation between a rise in SPY and a corresponding drop in volatility. The inverse is also true.
On February 5, 2018 there was a world wide drop in futures and a rolling stock market drop starting with the US market then rolling around the globe and back to the US. By the open premarket US trading in UVXY - a leveraged volatility instrument - went from $12 to $18. At the open of regular US trading hours and during that trading session UVXY touched $36 with a corresponding drop in SPY.
In the event of open conflict - selling SPY or /ES while buying UVXY common or call options will be be golden. I will ignore the small gains to be made buying defense contractors and hardware providers.
The people constantly touting UVXY will finally have their moment.
Why not do it now? I like to have a small UVXY position over the weekend. I will enter with 2% of capital account value on the first jump with the start of a military action in Ukraine.
Has anyone considered the possible narative that Mr. Putin can raise the price of Russian oil with this sabre rattling? The threat that this is winter and supply might be shut off for Europe should be a possibility. I should have the ability to move markets like that. Who can say?
I am prepared. Keep some dry powder around for this one to be long volatility and short S%P. This is historically my top volatilty trade when markets are rattled. during the February/March 2020 Covid black swan swoon UVXY went $12 to $132. UVXY portfolio leverage moved the common to 1.5 times VIX as adverised and hit it almost to the penny.
When the Russian miilitary shot a hole in the Russina Parliament building I made my first crisis profit - buy US financial stocks near book value on the one day drop. that was before the creation of leveraged volatility instruments. Yes I have been at it that long....
These things happen now and again.
This is from my current playbook.
all the best.
On February 5, 2018 there was a world wide drop in futures and a rolling stock market drop starting with the US market then rolling around the globe and back to the US. By the open premarket US trading in UVXY - a leveraged volatility instrument - went from $12 to $18. At the open of regular US trading hours and during that trading session UVXY touched $36 with a corresponding drop in SPY.
In the event of open conflict - selling SPY or /ES while buying UVXY common or call options will be be golden. I will ignore the small gains to be made buying defense contractors and hardware providers.
The people constantly touting UVXY will finally have their moment.
Why not do it now? I like to have a small UVXY position over the weekend. I will enter with 2% of capital account value on the first jump with the start of a military action in Ukraine.
Has anyone considered the possible narative that Mr. Putin can raise the price of Russian oil with this sabre rattling? The threat that this is winter and supply might be shut off for Europe should be a possibility. I should have the ability to move markets like that. Who can say?
I am prepared. Keep some dry powder around for this one to be long volatility and short S%P. This is historically my top volatilty trade when markets are rattled. during the February/March 2020 Covid black swan swoon UVXY went $12 to $132. UVXY portfolio leverage moved the common to 1.5 times VIX as adverised and hit it almost to the penny.
When the Russian miilitary shot a hole in the Russina Parliament building I made my first crisis profit - buy US financial stocks near book value on the one day drop. that was before the creation of leveraged volatility instruments. Yes I have been at it that long....
These things happen now and again.
This is from my current playbook.
all the best.