Trading mechanics
“What if I get assigned on my short UVXY Calls?” is a common concern for options writers. Let’s look at the risks and realities of option rights. First the mechanics. Sold Calls represent a short bias and upon assignment, you will have -100 (short) shares per contract assigned. Sold Puts represent a long bias and […]
Exercise and Assignment Read More »
As a weekly option seller, I am most concerned about the statistics for a Friday to Friday timeframe. A backtest conducted in 2019 (which included 2x leverage from its Oct 2011 inception to the reduced 1.5x leverage starting Feb 2018) quantified the probabilities for selected outcomes that I could use to inform the style of
End Of Week Metrics Read More »
As a habitual naked Call contract writer in UVXY, I am often asked how I did during the covid market correction in March 2020. I survived, and even profited, here’s the story.My naked Call selling strategy and defending mechanic began during the summer of 2019, and the first test came that December. A Trump tweet
Surviving March 2020 Read More »
Before registering with the SEC, I would share every UVXY trade I made on Twitter to solicit feedback in hopes of learning more and possibly improving my performance. Most often this would illicit more questions than suggestions and a common one was “have you tried X?”, so here is a breakdown of my strategy history.
UVXY Strategy History Read More »
Shorting requires a holder shares to allow them to be lent (in exchange for a borrowing fee) to others. UVXY, along with other levered ETFs are commonly listed as ‘Hard to Borrow’ (HTB) with few, and sometimes none available for lend. Many brokers, such as TD Ameritrade, offer a Hard To Borrow program that gives
No Shares To Short Read More »
(And from $40 to $2,400,000,000) After backing out UVXY’s 10 reverse splits, the initial price at inception now stands at $2,4000,000,000 per share and that value will only increase with subsequent reverse splits. If UVXY started at $40 in 2011 and is now worth .00000067, would it be possible that I could have made some
Shorting from $2.4 billion to $10 Read More »
Every shorter of volatility has asked at one time or another if there is an effective way to hedge their position, and despite years of searching, discussing, testing, I’ve concluded that there is not for some basic reasons Hedges are an insurance policy to protect something else, and a hedge would be considered viable if
Hedging – A beta Perspective Read More »
On my live screen I always have the following charts up: UVXY, /ES, VIX, /VX M1, and /VX M2. This gives me a complete picture as to the inputs for my trading. I’ll often include /CL and /ZN as checks on /ES movement to see if it’s a macro event or just a selected equity
Chart Watching for Relationships Read More »
Markets hedge uncertainty and hedge buying sends the VIX index higher. Some future events can hold significant impacts on markets and these include economic reports, Fed rate decisions, elections, and so on. Most binary events produce a noticeable divergence in the SPX-VIX relationship where VIX either holds steady as SPX rises, or VIX rises more