Here is a great article from Kim Klaiman on their winning SVXY bust trade:

“Overall this trade produced almost 45% gain on margin or 26% gain on $10,000 portfolio.

The bottom line:

A trade that was long SVXY, was a big winner after SVXY went down 90%+. This is options trading at its best.”…[Read more]

Incidentally, something that was pointed out on last week’s Vol Views is that the vol complex is not just impacted by the equity market. It is also being used as a hedge for credit worldwide. Some pension manager in Malaysia is hedging his risk in his local sovereign bonds, which he is required to hold, using VIX futures. Another one is the…[Read more]

The paradigm shift occurred when TNX crossed the line at 2.3%.

The bond market is always right.

I think you are delta neutral if you have less than 1000 betaweighted deltas per $100K of portfolio.

Jim Chanos recently said that he has never made any money on his shorts outright, that the purpose of shorts is to enable you to get more long. Get longer. Whatever.

It’s like the military saying “cover and move”.

And I think that is a big…[Read more]

Good episode of Option Block in which the guys address the issue of trading the “franken products” vs the VIX futures and options.

http://hwcdn.libsyn.com/p/6/9/e/69e9a71b72064aef/OptionBlock690.mp3?c_id=19045106&expiration=1518304792&hwt=7710c8624aa95f42ff25ca244eb90a0a

Welcome to delta neutral trading.

Same ramp again today in the VXX and UVXY.

>ereitzel I have an account at TD.

We have had an long bull market. We are at the end of the cycle.

Now we get the two sided action.

That means, learn to trade the vol products. There are other things than these inverse ETFs.

Even if they outlawed the ETFs altogether, you could still trade VIX options, VIX futures, and the mothership SPX options.

And then there is RVX…

A couple of takeaways for me

What I am learning here from Seth are three things:
a. liquidity
b. duration
c. exposure

And about myself.
I learned last year was that I just could not trade XIV. I do not have the gut strength for it. I found I did not want to live with a sword of Damocles hanging over my head. And that it ws just greed.

I moved…[Read more]

Now, the obvious question asked at Mark’s webinar was “When can we start trading SVXY?”

It was pointed out that as long as you have backwardation across the board SVXY faces a headwind. And this kind of backwardation can take a while to resolve. But once contango is restored, SVYX should see some nice upside.

I myself sold a small JUN 10 15 put…[Read more]

So the sticking point in the whole story, where it gets messy, is
with the futures.

The raw material for all these ETPs is VIX futures. There is a
limited supply.

So if you are a futures trader and you know that CS, Blackrock and
Barclays are going to have to buy an unprecedented amount of futures
after the bell at 4 o’clock, what are you…[Read more]

Barclay’s is a SIFI

Even ZIV, which is not practically subject to a termination event, as it is based on M4 to M7, went down an unprecedented amount in the afterhours, from 73 to 50.

Russell Rhoades did a presentation awhile back that stated you must have a 100% increase in both M1 and M2 on the same day for a termination event to be triggered for XIV. A next to impossible occurrence, he said.

I wonder what he has to say today.

I bought a boatload of UVXY 15 calls on Friday before the close, out of impulse. Plus some shares. “Whites of their eyes.”

They were in and out of the water at the end of the day Friday. I was thinking maybe I would break even or lose a little money on them.

Sold today at 5x and also the shares.

On Friday I also bought back the short legs on my…[Read more]

The way that email was written, the author is a newbie to vol products and indeed a newbie to trading. Somehow she got ahold of an account upwards of seven figures. And is now in the process of trading it into the ground, due to the size being too big.

She has no business trading that kind of size.

Not enough gut strength.

She should have 300…[Read more]

My reply:

Welcome to volatility trading!

We all feel your pain.

From here SVXY could go down to sub-50 so fast it will make your head spin. Once backwardation kicks in.

Will it? Nobody knows anything.

If it goes down to, say 40, will it come back? Maybe, but it could take time. It is capable of coming back from being down that much. Look at…[Read more]

Got this in the mail today:

“I got into SVXY on January 23rd, 24th, 30th, and February 1st and currently have a total (paper) loss of $100,000 just for the past week. I have 3664 shares of SVXY in one of my brokerage accounts and the loss there is $76,000, with just February 2nd accounting for a loss of $54,435 on that account only. Should I…[Read more]

Here is Ophir Gottlieb’s writeup of the 50 delta 30 delta put VXX spread

“The Incredible Option Trade in VXX That Keeps Winning”

http://www.cmlviz.com/cmld3b/index.php?number=11661&app=news&cml_article_id=20170822_the-incredible-option-trade-in-vxx-that-keeps-winning&source=TM_insights

You can click through to the trade…[Read more]