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MIAM1
Jul 5, 2020 7:04 AM

Why VIX is still the cheapest bet. I was wrong in May. Round 2. Long

CBOE Volatility IndexCBOE

Description

We were early on our VIX call back in May.

In essence, being too early is = being wrong.

We come back at the VIX with a fully-loaded trade plan.

The fundamentals line up and we cover them.

The technicals line up and we chart them.

Assymetrical? check.

Thorough? check.

Logical? check.

Oh, earnings season...will you please speak truth to dem der bulls?



Comments
ProfitHarvest
I think a lot of us underestimated the power of market manipulation that got us from May to this point without a crash.

In my estimation, that “propping” will make this next crash even worse and volatility plays even more profitable.

Credit Suisse dropping the TVIX on Thursday (after only 9 days notice) is a huge red flag here for the market as well.
MIAM1
@ProfitHarvest, Absolutely agree...as my coach Keith says...you try and hold a basketball under the pool...watch what happens when you let it go...

Especially funny if Mnuchin's face were to be staring at said basketball :)
Fintrader1111
How do you feel about UVXY? I bought 2k shares at 31.50 and sold $33 covered calls exp 7/11 which seemed like a no brainer even if it drops to $28 or $29 would repeat again. Although I think I may buy them back tomorrow and wait for it to spike back up..
MJC77
@Fintrader1111, UVXY is an excellent financial product - I've had my most profitable trades on it. I bought it for 13.80 before the 19th Feb, S&P500 top and got out at 16.14 for a profit of 10.1k (I don't trade options). My position size of 1% got catapulted out the window and I bet the ranch on it because I could see it was extrememly oversold. Do you know how high UVXY went? Just over 3 weeks later near the bottom of the melt down, it topped out at 135.00! Yer, it would have 9X my money. I learnt from that to keep my trailing SL at a safe distance, using the weekly low. No hesitation in recommending UVXY, it's a lot more liquid than it's counterpart, SVXY.
MIAM1
@MJC77, I will check this out ...thanks for the vehicle recommendation. Always good to learn about new products :)
scheplick
@MJC77, I've never had a good trade with UVXY and I've met too many people who actually try to hold it over night 😂
MJC77
@scheplick, That would depend on what sort of trader you are; if you're worried about holding it overnight you're day trading. I'm more of a swing trader, so I hold it for weeks but I understand your point...leverage compounds daily and I do have an appetite for high risk
Fintrader1111
@MJC77, Thanks.. I am going to hold thru expiration unless SPY bursts thru last months resistance.. I can't imagine volatility staying under $30 for long
MIAM1
@Fintrader1111, I wish I knew the ETFs well in vol space.

I stick with options on the VIX as it gives me exposure to the confluence of the fundamentals lining up in a time horizon :)
price_action_bars
i agree , so i will follow you !
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