8/22/17 Diary of a "pending" UVXY call options trade "live!" as I'm spekkin to ye...and why you ALWAYS lose trading options
Someone who is bearish the general stock market "might" be thinking it is a good time to initiate a short position in the markets. One way to do that would be via a VIX derivative like UVXY. UVXY happens to be setting up as a very nice trade opp imo. So I'm with you on the "short teh market" idear...especially on a very short term bet (10 days or less) UVXY is telling us of a future run to about 38.50 and it's now trading at 32.75 ish. Mistake #1 by options traders is entering an options trade too early. There is a time premium involved with options trading. Since this would be a very short term bet, if you enter your trade too early...you get decimated by decaying time premiums.
An example options play with "actual" live! pricing. Since our UVXY target is actually 38.50, but we are attempting to make a trade that will have to be settled in a very short period of time (10 days) the idear is to be conservative and shoot for an upside strike to play with that is not too far out of reach. I will track the Sept 8 expiry $35 calls, now at $3.05 asked. That means UVXY would need to trade to $38 by 9/8 just for you to break even ($35 strike plus cost of the option $3 + $38) On top of that, UVXY is now setting a serries of lows that say >>> "the lower I go, teh lower I'm gonna go"...and that's the WORST time to initiate your short. Well, chasing a rebound is actually worse. ALWAYS wait for a retest of "accelerated selling" lows. Let's see if I can pick off "the" low for UVXY via the 9/8 expiry UVXY $35 (maybe even $34) calls. Fell free to attempt this at home...ainn gonna cost you a cent. Some of my followers can't even afford a 1 cent upvote...including me! :O
8/22/17 1:20 PM update: See there, waiting for just the low for this move to setup already saved you a full/fool 16% in premium as the 9/8 expiry UVXY $35C's (calls) are now trading at 2.50 (were at 3.05 when I posted this blog)...or last trade at 2.50 anyhoo. They should get even cheaper than that...but probly not too much cheaper.
8/22/17 3PM EST update: With UVXY continuing to mark lower lows there is "no way" this trade "properly" sets up today so time to close up shop errrly for the day.
As a sidenote: This morning in one of my spews I mentioned how the VIX derivatives are always priced for "suckas" so I figgered I'd test that theory by checking the VIX call options for 9/6 expiry (VIX options contracts expire on Weds) and sho nuff sho nuff it is a MUCH better bet to trade teh VIX contracts. A similar typre trade to VIX $13 only costs 1.10 bid with a low of $1 asked as an actual trade. That means it is "likely" they can be bought below $1 when the trade sets up "properly." You guys in? Upvote this spew to $5 before 2PM and I will post the VIX trade too...cheap bass turds. :-)
8/23/17 1:42 PM update: UVXY now signaling a short term sell as it trades at 32.55. SPY still not generating a short term buy signal tho. I will open a limit to short 100 UVXY at $33...spot dead on. I figger the SPY would trade to abouts 244.25..ish to generate its short term buy. The SPY calls for this Fri expiry would be "teh" lotto ticket play. I might post a trade on the SPY if it plays out this way.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Fund&symb=uvxy&x=50&y=14&time=3&startdate=1%2F4%2F1999&enddate=2%2F18%2F2017&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1024&lf2=2&lf3=8&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
8/24/17 9:57 AM: Gonna cxl the short limit on UVXY and bump it up a tad. I will also spew a 1 day SPY long via the SPY 245 calls that expire tomorrow.
8/24/17 11:15 AM: I'll pick up the SPY 245 calls for 8/25 expiry here on teh retrace sub 244.20. In at .28 market.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=spy&x=52&y=18&time=18&startdate=1%2F4%2F1999&enddate=2%2F18%2F2017&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1024&lf2=2&lf3=8&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
UVXY also signaled sell on teh cross of $33 so I'll just short 100 at $33. Target of 29.77.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=uvxy&x=50&y=20&time=18&startdate=1%2F4%2F1999&enddate=2%2F18%2F2017&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1024&lf2=2&lf3=8&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
8/25/17 9:35 AM update: I don't expect it to happen but I would exit this trade if the asked on the 245 calls drops to .30 asked. Now at .36 bid.
9:55 update: Almost have my 100% gain here as the SPY 245C's are at .55. I will continue to move my mental stop up and "hope" UVXY trades to my sub $30 target. It's only at 31.06...."live!"
10:02 AM update. Screw it, exited my SPY trade at .70 marekt. Now I can concentrate on UVXY and the VIX. :-)
8/25/17 11:06 AM: Back in my long SPY trade but this time via the 244.50 calls that expire today. Paid .35 as teh SPY broke belowst 244.50..."live!"
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=spy&x=40&y=11&time=3&startdate=1%2F4%2F1999&enddate=2%2F18%2F2017&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1024&lf2=2&lf3=8&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
8/25/17 2:49 PM: SPY 244.50 calls now at .59, can't lose now. Still gonna shoot for .90+ on this trade but keeping a rolling mental stop 10% below the current bid of .56, but to the asked side of the trade.
thanks bought yesterday at .20 and just sold .60
8/28/17 update: UVXY approaching my sub $30 target so I will sit on a limit to cover the 100 shares I shorted at $33 for $30 asked. spot dead on. That's a nice $300 cushion to work with in case my Ty Ming on the sexy VIXen long coming is off by a tad.
8/29/17 10:30 AM EST: Time to exit this news driven freight train as me cover target was mist by .06 yesterday. Out here at 32.50 wit a $50 gain. Probly sees 32.00 before it trades thru the PM high of 37.25. Now I can concentrate on my "trade of the year" ...which is the short in the gold stocks.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=uvxy&x=36&y=15&time=18&startdate=1%2F4%2F1999&enddate=2%2F18%2F2017&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1024&lf2=2&lf3=8&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
9/1/17 premarket: UVXY trading to 28.30 in PM trading and likely won't get settled out today so I will not leave a buy limit in place for today.
9/7/17 1:45 PM: Sexy VIXens now selling down and I am "hoping" UVXY trades thru that 28.30 low. Now at 29.97..."live!"
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=uvxy&x=50&y=19&time=18&startdate=1%2F4%2F1999&enddate=2%2F18%2F2017&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1024&lf2=2&lf3=8&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
9/13/17 EOD update: Unless the VIX trades to my open 9.50 limit to buy I wouldn't consider a long in UVXY. But I will set a limit to buy at my UVXU "mythical" $1000 trading blog.