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]

Scott, that’s probably the best possible response. People mostly just want reassurance that things will be okay. I’ve received a number of e-mails like that this week, especially from pot stock and cryptocurrency investors…

The long 50/30 delta put spread strategy looks interesting. The 615% 5-year return is quite impressive, though also keep in mind that the average percent return per losing trade was -72.4%, which many traders won’t be able to stomach. Also keep in mind that we’ve been in a massive bull market for the past 8 years, which could skew any…[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]

David. drill down into the VXX option chain. You will find the largest open interest by far on the JAN 19 PUT 10 strike, followed by the 15. Open interest on the 10 has continued to build over the past month, although that may just be due to rubbernecking by the likes of me.

Yeah my position is down due to this vol spike, but I have a year for…[Read more]

Thank you Steve, I hope that this has provided some ideas for everyone involved.

As Seth has been saying, having plenty of available cash (or at least assets that can quickly and easily be converted into cash with minimal loss) is essential, along with giving the trade plenty of time to work itself out in your favor.

Kevin, it is true that the…[Read more]

These are all excellent points! I’ve had to discipline myself to give my trades more duration so that the trade has a chance to work itself out if it goes against me at first. I have to think in terms of weeks and months, not days! I haven’t considered going out a full year when buying puts on VXX or UVXY. Perhaps I should look into it, though…[Read more]

My rules do not allow me to sell naked options in vol product, nor calendar spreads.

I also gave up on selling UVXY call spreads and all indeed all call spreads in vol products, unless it is a clearcut case of vol crush after a binary event such as Brexit.

Instead I buy puts and put spreads.

One of the things I have learned from Seth is…[Read more]

That’s an interesting approach, trying different expiration dates. I’ll be curious to see how that plays out

If you take $100 and have it go up 10% and then take that new number and have it go down 10%, and repeat that up-and-down cycle four times, you’ll end up with approximately $96.06. In other words, choppy movement will deteriorate the price of an asset over time. Thus, all other factors being equal, it’s better to short an asset with choppy price…[Read more]

Thank goodness I was all in cash today (I was editing videos and coaching clients; staying busy saved me!). Seems like ages since we’ve had a -2% day in the markets. I feel that the “more attractive” (i.e., almost keeping up with the rate of inflation) bond yields will not beget market volatility for much longer, since the equities markets are…[Read more]

Regardless of everything else going on, it sure seems like all eyes are focused on the Nunes memo… Or is it just me?

Basically what Seth said: Beta slippage may only be a minor factor in a brief scalp trade, but it is a factor nonetheless and would favor shorting VXX over buying SVXY; and again, a disadvantage of shorting VXX is the “undefined” risk involved (unless you find a way to hedge the trade).

Thank you ereitzel, selling UVXY is a way of life for me… or at least a decent living

10-year Treasurys (weird plural spelling but evidently that’s how it’s spelled: https://www.cnbc.com/id/32462271) currently yield 2.785%. Everybody knows that it will reach 3% eventually, so that fact by itself shouldn’t be sufficient to tank the market. It’s…[Read more]

Can you can provide a simple example? @seth-golden

@seth-golden can you explain or send link or article that explains how the LOB works?

Steve, I generally go out 45 days til expiration when selling options, and 3 to 6 months out when buying options. I am never, ever sure of hitting a home run, so selling an OTM put softens the blow when I’m wrong.