More thoughts on SVXY #vxxgame.

I closed out all the SVXY stock I was assigned on yesterday because with the new structure, I just don’t see it taking off like it used to even when back in contango. With the VIX down exactly 0.96 this morning, SVXY only up 0.07 or so. The big gains we were seeing before Feb were from years of accumulated contango. Looks like we will have some 2 sided markets for a while and that hopefully will keep the VIX higher, good for selling options as @fuzzballl pointed out yesterday.

Still reading the new Sebastain book but have already picked up a few pointers from the market maker side. Only be long volatility for short periods of time. Do not be short unhedged volatility (see SVXY and XIV implosion), buying puts on VXX long term has shown good risk adjusted returns. However, I would take that 1 step further and suggest buying VXX put spreads, especially after spikes. Looking at 17 DTE VXX put spread, buy the 45, sell the 40 costs 2.86 at current prices for 5 dollar max profit or roughly 1:1 profit to loss ratio. I don’t have the cash or margin at the moment, but will be looking to use some of these as we go forward. You could even go ITM for less risk and still come out ahead.

Rest of the week just sitting on my hands letting theta do it’s thing. Have a good week!