Kelly 11:44 am on Thursday, January 19, 2017
Tags: VXXGame ( 769 )

$UVXY

#VXXGame
Nibbled a little
STO Feb 17 $60 calls @ $1.00

fuzzballl 11:52 am on Thursday, January 19, 2017

Interesting trade out in 2019. Looks like someone is selling 5/10 call spreads. Maybe not a bad deal…3 bucks for 5 wide.
- Jeff 12:03 pm on Thursday, January 19, 2017
  
  A sure bet unless there’s a market crash.
  - fuzzballl 12:04 pm on Thursday, January 19, 2017
    
    Guess it depends on when the crash is. Tomorrow would be ok. Two years from tomorrow maybe not…LOL
- vxxkelly 12:55 pm on Thursday, January 19, 2017
  
  I was actually looking at buying some Jan’19 puts. Between now and then, $UVXY will likely reverse split at least 2 or 3 times. Don’t have the “risk” from a market crash. If I bought today and we get a vol spike next week, the position would certainly lose some money, but long term virtually guaranteed to be a winner. Buy a few $10 puts for $5 and just stick them in a drawer.
  - fuzzballl 1:01 pm on Thursday, January 19, 2017
    
    How about selling the call spreads to finance the long puts? Super bear!
    - vxxkelly 1:09 pm on Thursday, January 19, 2017
      
      Even better. That might just happen tomorrow as a starter position then add if/when premiums get better.
    - vxxkelly 1:11 pm on Thursday, January 19, 2017
      
      Then since I won’t have anything to do for 2 years, I’ll have to try to figure out that @fibwizard pivot thingy. 🙂 🙂
      - fuzzballl 1:41 pm on Thursday, January 19, 2017
        
        I guess it all comes down to whether you buy your eggs by the dozen or 12 at a time… 🙂 🙂
        
        Buy 10 strike put @ 5.00 (max gain 5 max loss 5)
        Sell 5/10 call spread @ 2.50 (max gain 2.50 max loss 2.50)
        
        I went all the way down to 2.75 and couldn’t get filled. Either way it’s all about the same. I guess selling the spreads at least there would be a chance to roll where once the puts expire we’re done. Interesting trade when I saw those earlier.
        
        vxxkelly 1:56 pm on Thursday, January 19, 2017
        
        Will have to think about this overnight. I just tossed the $10 strike out there, probably better strike choice for better risk/reward and profit.
  - Jeff 2:08 pm on Thursday, January 19, 2017
    
    I have done pretty extensive study and testing on buying long-term UVXY or VXX puts at low levels, like 25 and below. It is not worth it. Selling low strike calls or call spreads would be better.
    
    Buying puts can be good on a huge spike, and then it’s good to buy ATM puts. But the long-term, low-striked ones are not good.
    
    If you buy a 25 put, the most you can make is $2,499. That’s because UVXY may reverse split a hundred times, but it will never reach zero. If you look at the 25 puts now, expiring Jan 2019, its current price is 16.30. Obviously, making $800 over 2 years is not worth the investment. If we get a huge spike in UVXY, the price of that put will drop, but not too much… because at that time Volatility will be high, driving up all options prices.
    - vxxkelly 5:54 am on Friday, January 20, 2017
      
      Thanks Jeff, spent some time last night looking at these and thinking about them as well. I had thought that the buying power effect of the put would be less than the purchase price and that’s where I would see a better return % on the invested capital. Turns out, buying a $10 put for $5 ties up $500 in buying power. So probably not the greatest use of $. But it was never going to be a big position. Just another way/angle to play the #VXXGame.
      
      One could argue though that an investment that has a very high probability of nearly a double over a 2 year period isn’t the worst idea we’ve ever had.
      - Jeff 6:35 am on Friday, January 20, 2017
        
        I may sell a deep in the money call when we get the next UVXY spike. The prices on those will go quite high, so much better to be selling than buying.
        
        vxxkelly 6:36 am on Friday, January 20, 2017
        
        Agreed.