Short VIX Play: UVXY Puts
Updated
Decay strongly favors the contract holder. Notice even in the course of one day, with VIX hanging steady around 35-36, this thing lost $1 over 6 hours.
See most insightful post credit to Hungry_Hippo, attached!
Traded for $24 in the AM then price relaxed as VIX fell, on viral scare news at 14:38 VIX jumped back to 36 but UVXY reached... 23! This thing fades fast.
It contains no real property or equities; ONLY futures short-term contracts, which wind down real fast. Scroll back to see price change over past 8 years;
this is not a graph error, it really declined from over 15m to trade where it is today.
When market recovers, this ETF will go back in the crapper but it will be much less than when it started in Feb, will go under $13 and should crush down to $10 as the futures in the fund decay with time value. Only risk in it is another tank-off, we could certainly see a retest of the Friday 28 Feb low, but this will still decay!
Folks ask; "Why is it still over $20 then?!" Because of reverse splits! When it goes under $10 the exchange splits the shares 1:2 and the price doubles but holders gain half as many shares, eventually adjusted for these splits it will end up trading for a few pennies. DO NOT HOLD THIS ETF!!!
My strat: In the Mar $18 and Apr $17 puts, these are fairly cheap plays between $1.1 - 1.6 today. Back at $12 these will be deep ITM. A 0.786 Fib retracement of prices will drive this down to crush levels.
This isn't investing advice, just another crack pot scheme; trade at your own risk; GLTA!!!
See most insightful post credit to Hungry_Hippo, attached!
Traded for $24 in the AM then price relaxed as VIX fell, on viral scare news at 14:38 VIX jumped back to 36 but UVXY reached... 23! This thing fades fast.
It contains no real property or equities; ONLY futures short-term contracts, which wind down real fast. Scroll back to see price change over past 8 years;
this is not a graph error, it really declined from over 15m to trade where it is today.
When market recovers, this ETF will go back in the crapper but it will be much less than when it started in Feb, will go under $13 and should crush down to $10 as the futures in the fund decay with time value. Only risk in it is another tank-off, we could certainly see a retest of the Friday 28 Feb low, but this will still decay!
Folks ask; "Why is it still over $20 then?!" Because of reverse splits! When it goes under $10 the exchange splits the shares 1:2 and the price doubles but holders gain half as many shares, eventually adjusted for these splits it will end up trading for a few pennies. DO NOT HOLD THIS ETF!!!
My strat: In the Mar $18 and Apr $17 puts, these are fairly cheap plays between $1.1 - 1.6 today. Back at $12 these will be deep ITM. A 0.786 Fib retracement of prices will drive this down to crush levels.
This isn't investing advice, just another crack pot scheme; trade at your own risk; GLTA!!!
Trade closed manually
IMO the bloody thing will sell again. These faded and managed to lose on drawdown in spite of market move in my direction... so damned tricky! Feels like a 4th wave with more down to come, if it sells again these will be worthless, stopped out at $1, out 0.25c on DCA positon.
Volatility remains high in spite of the huge rally so the ETF stayed up.
Had been better off by far in simple strategy to buy SPY weekly calls, lol.
GLTA!
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