Option Iceman 12:24 pm on Wednesday, February 3, 2016
Tags: IRA ( 431 ), ScalpTrade ( 30 ), ShortPuts ( 4,763 )

$UVXY #ShortPuts #ScalpTrade – since…

$UVXY #ShortPuts #ScalpTrade – since I am short many calls and no longer long any stock …
Sold UVXY Feb 05 2016 36.0 Puts @ 0.23
Sold UVXY Feb 05 2016 35.5 Puts @ 0.16
Sold UVXY Feb 05 2016 35.0 Puts @ 0.11
The strike price is below any price hit since mid- January. These expire Friday.

#ira

mikesspamlessemail 1:32 pm on Wednesday, February 3, 2016

If all your calls closed in the money and you were assigned short, what percentage of your account would be short? That thing has been all over the map and taken a few pieces of me with it.
- Option Iceman 1:44 pm on Wednesday, February 3, 2016
  
  $UVXY – Mike, the closest short call strike I have in any month is at 60. Almost all my strikes are above 80, and my biggest positions are at strikes of 110 or higher. I’m not really concerned about assignment, but I am concerned about the margin pressure if the stock should rally 50% or 60%. Of course if that is happening, the S&P500 is probably below 1600 and the pain will be there for everyone.
  - mikesspamlessemail 5:06 pm on Wednesday, February 3, 2016
    
    Good point- I was short some $95 calls back in the August spike that I couldn’t hold because of margin- ended up eating an incredible loss since I couldn’t ride it out. Lots of leverage but also those went from something like 10 cents to 40 dollars.
    - Michta 6:46 pm on Wednesday, February 3, 2016
      
      Would closing those 95s and selling a bit up and further out have been doable wih your margn situation?
      - mikesspamlessemail 12:03 am on Thursday, February 4, 2016
        
        I think so if I had more time- they just liquidated the position on me that morning. Those calls went from 30 cents to 40 dollars in a week, truly insane.
    - fuzzballl 8:54 pm on Wednesday, February 3, 2016
      
      UVXY – Mike, I’ve had similar issues in the past also. I’ve been sticking to mainly spreads since last August. Basic rule is 10 wide and at least 100 percent above recent lows and trying for at least one dollar credit. I’ve never had a losing spread in the last 3 years (spreads required in the #IRA also). I’ve only had to roll one or two…earlier the better for the roll too. If they do get in the money you’ll find that you can still roll for a credit but you’ll have to increase the number of contracts or widen the spread a little…either way works with about the same affect on margin. Had a Dec 50/60 spread in my IRA that I let sit there all through the Aug spike to 80 with no concern whatsoever. Volatility finally tanked and it was an easy winner.
      
      I’ve been balancing this with the outright shorting of the VIX futures also. Those are working great…made more just this month than I would’ve selling many OTM UVXY naked calls with a lot less potential pressure on the account and a lot less long term black swan risk. The only requirement for the futures is about 6000 margin (that hardly ever changes regardless of volatility) and your accounts size to withstand a mark to market every day of the futures value. Since these trade for 1000 dollars per point you would need an extra 1000 dollars for every dollar rise above your original sale. With the wild swings we’ve had it’s pretty easy to sell at 25 and be able to close for nice profits within a few days..(or within 45 minutes like today). Actually booked a hefty profit sitting in a taxi line for takeoff at MIA this afternoon! There are potential carrying (roll) costs for these that I offset by selling UVXY puts just in case I have to hold for a month or more.
      
      Good luck!
      
      PS….position size is probably the most important aspect of risk management.
      - mikesspamlessemail 12:04 am on Thursday, February 4, 2016
        
        Thanks for the great information! Yes, position size is key- as I found out both in August and this past few weeks. Trying to get back on the horse… slowly.