Thu, Nov 20, 2014, 9:48 PM EST - U.S. Markets closed


% | $
Quotes you view appear here for quick access.

ProShares Ultra VIX Short-Term Futures Message Board

you are viewing a single comment's thread.

view the rest of the posts
  • ralphjlindblom ralphjlindblom Aug 3, 2012 9:12 PM Flag

    writing covered calls to bring cost basis down is this good?

    I write covered calls on stocks and tried it on this ETF and lost a bunch of money.

    Why? Because, long term this ETF will decay each month faster than any option premium you receive.

    Typical case:

    Without writing the call
    cost basis $7.20-market value $6= 1.20 loss

    Now let's assume different prices in Sept

    Price of $7

    Cost basis $7.20-.65 option-7 ETF= profit 0.45

    Price of 6

    Cost basis $7.20-.65 option-$6 ETF=loss of 0.55

    Price of 5

    Cost basis $7.20-.65 option-$5 ETF= loss of $1.55

    Price of 4

    Cost basis of $7.20- .65 option- $4 ETF= $2.55 loss

    Now, what do you think this ETF will be worth in 1 1/2 months?

    This will guide your decision.

    Remember, you are fighting against contango as if we get no change in spot VIX in 1 1/2 months, then Sept future VIX of $19.36 will drop to $15.69 or a 19% drop (or $4.86 based on todays price).

    The one good thing you have going for you, is that spot VIX is so low that it may not drop any lower in a month and a half, and you always have a chance that it will be higher.

    Good luck

    SortNewest  |  Oldest  |  Most Replied Expand all replies
22.08-0.37(-1.65%)Nov 20 4:00 PMEST

Trending Tickers

Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.
Aruba Networks, Inc.
NasdaqGSThu, Nov 20, 2014 4:00 PM EST
Foot Locker, Inc.
NYSEThu, Nov 20, 2014 4:02 PM EST
Intel Corporation
NasdaqGSThu, Nov 20, 2014 4:00 PM EST