Mikael

this earning season might shed some light. if it's really bad there might be a pull back, but then again the fed can always flood more cheap money to prop it up, so who knows.

5/17/13 vix @ 12.79 / uvxy @ 56.2 6/24/13 vix @ 21.91 / uvxy @ 89.84 vix +71.8% / uvxy + 59.8% a month later after vix came back down to 13, uvxy came back down to 41.35. point is, vol is mean reverting. it'll never stay high forever and vix futures won't be in backwardation forever. if the trade goes against you, ie uvxy spikes up, if you can keep the trade for the long term it'll eventually become a winner. uvxy cannot spike up to infinity nor can the vix. if given a choice to bet down or up on the uvxy over the long run, i'll always bet down on uvxy. just to clarify i'm not suggesting you short the uvxy when the vix was at 12.79, i'm saying you short it when it's relatively high. like yesterday when the vix went over 20. you could have shorted the shares and sold atm or 1-3 strike otm puts then. today you would have collected 2-4 dollars in intrinsic and a couple of cents in extrinsic and closed everything off for a net profit.

ok here's the thing with doing it with puts. so let's say you buy a DITM put instead of shares going out 90 days. what if the uvxy spikes up and stays high for the next 3 months. it's not likely but certainly possible. plus even if you buy the 60 ditm put right now, it'll cost you $5 in extrinsic. so if uvxy spikes up and doesn't go down you'll lose that entire $5. of course selling extrinsic every week will offset that but i prefer to do it with shares for that reason. basically if you short shares it's less leverage but you have no time restriction. you can hold it for a long time without worrying about time decay etc and you can always sell the weekly options against it which decays very fast.

I want to talk about a trade i have been doing on the uvxy and i think not enough people are taking advantage of this. so let's assume the uvxy is trading at 35.5 so what i would do is short uvxy, say 100 shares then i would sell the ATM put, so the 35.5 put going out next week. now this put has 2.915 of extrinsic value in it according to ToS paper trading. so my net position is -100 shares of uvxy @ 35.5 -1 contract of uvxy oct wk3 35.5 put if vol comes down and uvxy drops, say to 30 by next week, you would have made quite a bit of extrinsic. i see the 30 put right now to have about 50 cents of extrinsic value in it. you don't have to care about the price because your fully covered through your shares. so with time decay and the put going ditm, the time value would have drained out of the put and you get to keep most of the extrinsic. so you would make about 2 dollars / contract. so that'll be a net profit of $200 on the trade if you close the stock and option side together. if vol goes up and uvxy spikes, then it's not an ideal position. let's say it spikes back up to 45.5. well now your down 10$/share, so -1000$ on the stock sidebut you would get to keep 290$ of the contract in full since it's now far otm and it'll expire worthless. so what you can do the following week is sell again the 35.5 and collect the extrinsic again to bring down your paper loss on the shares. the idea is eventually uvxy will come back down and you can close your total position for a net profit. since you collected extrinsic on multiple weeks. what you want to keep mindful of is don't over allocate by shorting too many shares and risk getting margin called if uvxy spikes up significantly. you can also do the other side if you believe uvxy will rise, so long shares and sell covered puts. the trade mechanics are the same.

uvxy is down 6.5 dollars so if you shorted yesterday you should just take profits now, this thing isn't really resolved yet and it could spike back up so might as well take a 6 point profit off the tables now.

paul is right, if you short now uvxy will go up everyday as long as it's in backwardation. but history suggest backwardation don't last very long and eventually uvxy will fall, if you short a bit of shares everyday to cost average up you'll reap the profits when they resolve this shutdown/debt ceiling thing. of course the risk is there is a market meltdown and vix spikes up to 50 and stays there for months. then you'll suffer a tremendous amount of paper loss, so make sure you don't over allocate if you do this trade.

one disadvantage of that is you can't short covered puts or calls because xiv has no options. if you short vxx shares you can sell covered puts, same as uvxy which is just 2x leveraged of vxx.

short the uvxy shares, it's double leveraged version of vxx basically. i'm so short that it's not even funny. then u can sell covered puts against your shares.

i'm on betting on them resolving this debt ceiling thing, just like 2 years ago and vol coming down. i just don't see them defaulting on debt. that'll be millions of times worse than greece and basically self destruct the us economy. and no body wants to be blamed for self destructing the us economy. not congress or anyone in it. they are going to raise the debt ceiling and continue to borrow to pay their "bills", or wait, or just buy their own debt LMAO. aren't they doing 85 billion of that every months already the next market correction/crash will be a doozy. can't wait

I duno, sure looks like it. but not sure if there's regulation against massively selling vix futures. overlay the /VX chart with the SPY and /ES charts and you'll see how they are doing it. notice spy runs all the way up until market close, then the /es futures sell off right after market closes. look at the tues and weds charts

did you guys see how the algos were trading vix futures past couple of days? first they aggressively sell vix futures driving the vix down and then they aggressively buy S&P futures driving the S&P up until market close (they also short s&p stocks). then they unwind all the futures after market closes causing the market to fall the next day and reaping profits on the s&p futures and shorting s&p stocks. wish i had enough capital to drive markets like that. what a easy way to make money lol

i ended up buying back the iron fly for 69 cents.

I actually sold the 32 34 36 iron fly for 1.22 credit before close. lol

fly went down to 1.48 @ mid. got out a bit too early. oh well small loss.

wow surprised at no taper at all. out at 30.5 bought 1000 shares of XIV @ 28.68

bought 1000 shares of uvxy at 33.05

i sold all puts. my rationale a) if iv goes up enough tomorrow it will collapse the fly's credit, and i'll buy it back for a small profit if iv doesn't go up too much tomorrow to take profit, i'll hold it through and hope for a move and gamma gains basically i'm sacrificing some vega to cut my theta a bit. not a huge difference, if the stock moves the straddle will perform better. if it doesn't move the fly will take less of a loss. if held through the event and the stock doesn't move, the IV crush will affect the fly a bit less than the straddle.

i sold the 100.5 103.5 106.5 fly for 1.53

This isn't much of a backtest, but if you look at the last FOMC meeting on June 18-19. On June 18, TLT was trading at 113.3, Mr. B wasn't too clear on when or how much they are going to taper, bond takes a dive 3 days later June 21, TLT was trading at 108.4. that's ared $5 drop in 3 days. Of course we don't know if the reaction will the same this time, but if you are expecting it to move, why not sell a butterfly? you have less theta decay than a straddle and will also benefit from a move. for instance you can sell the 100 103 106 weekly put butterfly and receive 1.39 credit right now. (probably more credit on the 17th), if the stock moves below 101.46 on the 18th you profit. if you take the trade off before Thursday 12pm (the 19th) you should have minimal risk since your max risk is $3 at expiration.

oh nvm didn't realize they were expiring so soon.

Haha sorry bill was a typo. Thought it might be good to pick some up leading up the 18th

the 16 put calendar is worth 0.05 debit right now. anyone thinking of buying it or waiting for it turn into a credit

this is so much simpler, never going to use option trader again, that screen is soooo confusing.

wow thanks i figured it out finally. so you can basically type in the ticker, select option combos, then build up the combo as a long butterfly, then the existing trade actually show up as -10. then you can close it the normal way. thanks!

thanks marco. so basically in the options trader for short flies i should do something like this? (using AAPL as an example) buy 1 x 500 call sell 2 x 505 call buy 1 x 510 call then i add it to quote panel then i drag it to my spread sheet window then i click on the bid to sell the spread this should give me a short butterfly which says -10?