the chalk or the longshot - pick your poison
UVXY traded upward 20% on 3 January 2020. that was the day the Iranian General, Solemani, was - pick your characterization basd on your politics - murdered assassinated etc. In February 2018 UVXY rose 110% in one session. In March 2020 The Covid spike was $12 to $130 in two weeks. Absent these outliers, UVXY has dropped from over $30,000 in 5 years with the most recent reverse split to $28 today. Along the way there are always these short term interuption of the downward bias based on fear. Fear fuels the spikes. whether it is SPY fear, volatility in all world markets or the spectre of Iranian oil market retaliation. The portfolio of UVXY is completely available cash and the purchase and sale of short dated volatility instruments that are rolled every month. Time decay erodes the portfolio until the spikes occur.
Yesterday UVXY Net asset value dropped 10%.
Those who thing that some volatility should be in a portfolio for the downside protection,r for the gain on instability can today buy the risk on cost to hedge for 48 days at $2.50 with unlimited upside gain. It is possible to reduce that cost with a put vertical that has a lose $2.15 and gain $15 hedge that expires in mid September with a complete loss.
A larger portfolio that has a dividend aristocrat leaning will likely sell the common or buy a September $29/$15 put veertical for $704 to earn $698.
Why the discrepancy? The pricing tells the story. A trend that is inexhortably downward yielding less, or a guess as to the upward spike in volatility.
the chalk is downward. the longshot is the volatility spike for any narratice the investor chooes to believe.
Yesterday UVXY Net asset value dropped 10%.
Those who thing that some volatility should be in a portfolio for the downside protection,r for the gain on instability can today buy the risk on cost to hedge for 48 days at $2.50 with unlimited upside gain. It is possible to reduce that cost with a put vertical that has a lose $2.15 and gain $15 hedge that expires in mid September with a complete loss.
A larger portfolio that has a dividend aristocrat leaning will likely sell the common or buy a September $29/$15 put veertical for $704 to earn $698.
Why the discrepancy? The pricing tells the story. A trend that is inexhortably downward yielding less, or a guess as to the upward spike in volatility.
the chalk is downward. the longshot is the volatility spike for any narratice the investor chooes to believe.
Comment:
I really should spell check what I write. My apology.
Trade active:
The chalk. Absent the bounces upward on volatility spikes the portfolio NAV erodes.
I buy the in the money puts and get long the calls only on twice the average true range spikes in volatility.
Making money while waiting.
I buy the in the money puts and get long the calls only on twice the average true range spikes in volatility.
Making money while waiting.
Comment:
SPY can drive volatility but it is not the only thing. The deatkh of the Iranian General roiled the oil market.
I buy puts and wait to get long calls on every move that is twice the 20 day average true range upward. Until them it is best to make money downward.
I buy puts and wait to get long calls on every move that is twice the 20 day average true range upward. Until them it is best to make money downward.