If UVXY opens 100% higher and you are long UVXY stock, then you double your money invested. If long XIV and "UVXY" rises 100%, then you would lose 1/2 of your investment, because you would then need to "double" what you have left, in order to get back to break even. So XIV currently trading at $22, would drop to ~ $11/share.
It's been a bear market, for sure. But we are at turning point. I sold OTM call today against my UVXY call that I was long since end of trading day last Friday. I maintain Bear put spreads on UVXY since panic market selling Jan 29th. The market in general will trend higher Feb thru May. UVXY puts will make money!
Crude oil down 2%. S&P down 4.25 currently. Overall market still very much influenced by price of oil. I think, and hope, we start lower this morning (with UVXY higher). Will be a nice start for the trading week, that is, getting the direction right to start Monday morning. I would like to see a little more pullback in S&P than indicated, but happy that no crazy upside follow thru from Friday's move.
I've been trading options in UVXY for a while. I post on other boards, but except when massive panic, hardly anyone post these days. I use to get so entertained by yahoo finance boards. And, occasionally some ideas about trading that were useful. I take most of the posts with a grain of salt, but still enjoy the sharing of ideas while trying to grind out a living everyday trading stocks and options. UVXY board looks a little more active than what I have seen on some of the boards that I follow. I recall following VXX board for a few interesting years.
I play both sides with UVXY. Great trading tool. Moves as much as 20% these days. I just hope I can stay on the right side of enough trades to eek out a nice profit by years end.
Premarket is down currently with S&P futures off ~ 5 and change.
I am hoping for a down opening, then I will reposition, for I believe the market will end higher by close of trading Feb 1, 2016.
Not insulting goldoking's mother, but she obviously had Zika virus when she was pregnant with him. That is why he makes such bad decisions.
I also have money in an energy sector mutual fund that goes up and down with price of oil. I have traded USO and XLE in past. They too can be frustrating plays on oil, and why I eventually moved to OIL. The crash in OIL last week was disheartening, but having seen that happen with another security, in past, helped me not panic. I was also lucky because a house call on my account resulted in me selling my shares the day before the drop, and I got back in, though too soon, on the day of the drop, As the price fell like a knife, I bought two more times, and doubled my holdings by end of trading day. I loss money, but less than if I had been fully invested at start of that day. I will be near break even at open of market today, just on OIL. I have a few other plays on the market in general and am net long the market today. So will at least be a good day at market open today. I will be adding protection from the get go!
Probably a smart move eyecandy. As you can see, XLE can take hits in this market too. And may be a little sluggish on some up days. In this highly volatile market, dividends are meaningless. Your 3.3% div that will take a year to realize was more than wiped out in single day from cap loss! Better than dividends is having an ability to add and subtract protection. I buy puts and sell calls to protect my accounts during high volatility. I still lose money when market tanks, but takes the edge off the loss, and very easy to remove protection when get sense we are oversold, then the upside runs have more juice than the selloffs.
You obviously own USO and want to entice OIL longs to switch to USO. Nice try, if folks do as you suggest, would be a nice boost to USO price, You could then succeed in your trade with USO. A win for you, and you helped make it happen, by pumping and dumping.
The folks who jump from OIL to USO are not likely to gain, and will more than likely lose money with that choice. And will be paying out commissions for a trade that may very well lose them at least some money.
USO is trading above NAV. OIL over time trades in very similar pattern to USO, and, in fact currently is slightly discounted compared to USO.
Folks, do some chart comparisons before heading such advice. Use your brains. Don't act like sheep and jump from fear that the trading wolves use to manipulate crowds to make their trades work!
If compare USO and OIL charts 1 week, and 1 year out, USO has now slightly outperformed, only because of yesterdays debacle in OIL. For all practical purposes, OIL and USO move in same manner. OIL's correction is over. If crude oil continues higher, then OIL will trend higher as well.
Quote as of 7:20 AM
4.57 -0.94 / -17.06%
As of Jan 21
Friday’s Pre-Market Switch to standard view »
4.72 +0.15 / +3.28%
I repeat, NEVER PANIC!
Been a rough year for all commodity investors. And for equity investors over last 7 months. But, if history means anything, the markets will eventually move higher.
This is the latest:
Oil (Light Crude)
March 2016 contract
$ / barrel 30.82 +1.29 +4.37%
I believe we might see a turn around in OIL. USO is trading with premium and just because OIL NAV was 3.70 does not mean that it will fall to that. The NAV will adjust as crude oil prices climb and its likely that OIL will continue to trade at some premium for a while.
The current futures outlook Oil (Light Crude)
March 2016 contract
$ / barrel 30.68 +1.15 +3.89%
I am thinking that some folks who bailed out might regret their getting out, if they wait too long to get back in OIL.
At least it oddly stayed up when it should not have, and that gave owners of shares ample opportunity to buy protection or get out before the plummet. I actually got out because of a margin call on my account, then I took advantage of the huge selloff to get back in. I got in too soon though, and had no idea that it would fall so much in one trading day, especially with crude up so high on the day. Crude is looking higher again today. OIL hopefully will stop falling today.
No need to panic. Same exact problem occurred with TVIX a while back. When shares are limited by issuer, other forces (other than the benchmark) may significantly alter ETN price. Barclay's simply needs to end the limitation of shares as was done for TVIX, and ETN will then track benchmark more closely. Barclay needs to do that, or face major legal challenges from share holders.
Recall the debacle of TVIX a while back, maybe 2 or three years ago. Had a 20% loss in a day for odd reason, then traded strangely for a few days. But if look at chart over the last year and compare with UVXY, nearly identical pattern.
So same will be true for OIL and USO.
OIL will track the same pattern as USO over time. Compare last 5 trading days, see OIL was trading too high, but now has overshot to down side. In one month it will all even out. And both USO and OIL will appear similar in pattern. If crude oil starts trending higher, then will see OIL and USO do the same.