The VIX is tagging the 3 standard dev. upper BB on its daily chart, which is typically where it needs to be for us to get a market bounce. Also there is an ongoing negative divergence with the 5,3,3 stochastic in 1 hour VIX chart. With this setup, most of the time the market bottom is signaled after the first indication of negative divergence. Rarely, it takes a 2nd or 3rd indication to signal a short term market bottom. Looks like we will need a 3rd wave. I hope the chart snippet of the 1 hour VIX chart will clarify my description.
The lowest since the Q4 2018 selloff, then before that, Feb 2018. Before that you have to go back to Jan 2016 to get readings under 10.
Largest Dow point-drop in history: -1,190.95 (-4.42%)
Largest S&P point-drop in history -137.63 (-4.42%) (exact same percentage as Dow)
Worst S&P day since August 2011 (percentage basis)
Fastest correction (down 10%) in entire history of stock market.
#BearCallSpreads – New position in these strikes…
Sold UVXY JAN 17 2021 30.0/40.0 Bear Call Spreads @ 1.54
#SPX1dte . Sold $SPX Feb 28th 2830/2850-3120/3140 condors for 1.45. IV: 41.97%, SPX 3013, deltas: -.06, .06.
Width: 270 points
Sold April 17, -20/-20/+22 ratio put spread for .83
STO April 17, 55/105 strangle at 4.45
Sold April 17, 175/185/225/235 for 3.10
#BearCallSpreads – In a little tastyworks account I rarely look at. Set it and forget it until UVXY gets back near lifetime lows.
Sold UVXY JAN 17 2021 20.0/30.0 Bear Call Spreads @ 2.40
Sold to close $VIX March 17th 17/20 call spread for 2.21. Bought for .52 on Jan 15th. Max possible on this is 3.00, so I’ll take this now, as the risk of going to zero is bigger than the additional .79 I might gain.
Sold $TLT 3/20 152/157 bear call spread @ 1.36 with TLT at 151.06
With the VIX so extended, taking a small position in the other direction. Bought $VXX 3/20 21/17 bear put spread for 1.80 debit.
#VXXGame Earlier, sold $UVXY Apr 17th 19 call for 4.65. Adding to the position. Number of shorts in VXXGame is still about one-third number of longs.
Sold April 17, 30 put for .75
#BearCallSpreads – Forgot I had these in. Filled at the open.
Sold UVXY APR 17 2020 20.0/30.0 Bear Call Spreads @ 2.04 average
Taking a small flyer, BTO March 20, 56/60 bull call spread at 2.00 for a small trade.
Now at 11.34
#Stock – Instead of selling any more puts in this (or anything else) I’m spreading some dollars out into SPY stock. Buying a few shares every 5 point drop to get into a longer term average position.
Bought SPY stock @ 304.00
BTC 25/35 bear call spread at 1.80 and sold at 1.10 so took a small loss.
#ShortStrangles – Going inverted on my 120/130 strangle by 5 points but premium received is greater than that so no upside risk.
Rolled ROKU MAR 20 2020 130.0 Call to MAR 20 2020 115.0 Call @ 3.50 credit (10.75 total now)
Unfortunately I’m going to have to dump out of $DRIP short calls. They are my only positions going against me badly, since I have long options hedging my $UVXY and $VXX shorts.
We are poised now to see the worst week in the market since the financial crisis. Even in best case scenarios with corona virus, it’s likely to scare the markets for a few more weeks. What this will do to $XOP is uncertain. But since yesterday’s close we are going to open 4.4% lower. This means DRIP must open (x3) 13.2% higher. So a .70 drop in XOP means at least a $21.00 rise in DRIP.
Frankly, most of my accounts can’t handle it, and I need the margin to sustain and place other positions. I will try to profit from DRIP’s eventual decline, but I’ll have to wait until it’s actually underway. Fortunately, I didn’t go nuts and only have 3 calls on two accounts, and 2 calls in a third account. I kept my smallest accounts out of it completely.
Other than a couple misadventures over the years, one in $KOLD and a couple in $NUGT, the #ContangoETFs strategy provides a pretty smooth income. But these outlier moves are too damaging, so I’m going to cease the naked calls and use diagonals or spreads, like many of have switched to in #VXXGame and many of you are already doing in DRIP.