I laugh when people refer to this as a POS. The best stocks to play with, in my opinion, are those that are predictable. If you play this right, it can make you a ton of money. Yes, it continues to trickle down. So what to do in a situation like this? Buy the monthly puts. The April $8 puts were selling for about $1.25 in mid-March, after the March options expired. Today they could be sold for $1.75. And we've still got a week until they expire. Easy, easy money.
I find it very interesting that the put prices are not falling all too much in comparison to how much the calls are going up. It's almost like the market makers are planning for this thing to come right back down, and want to limit the profit potential with the puts.
Actually I'm not in this right now, just sitting on the sidelines. Good luck if you're long. As for 14 this week, I still say that's doubtful... I wouldn't get too greedy going long UVXY.
Firstly, there are no options available on TVIX. Secondly, UVXY is leveraged greater than VXX. Look at today's movement. UVXY went up 10.72%, and the $8 calls went from $1.10 to $1.60. That's a 45% gain in the nearest strike call. Now let's look at VXX. It went up 5.2% today. The April $21 call shows a previous close of $1.37 and a current bid of $1.84. That would be a 47% gain. However, I'm not certain that $1.37 is the "ask" price that it closed at yesterday, and given the current spread (difference between bid and ask) of 21 cents on that option, the "ask" price at close yesterday could theoretically be up to around 20 cents greater than $1.37, which would put your percentage gain more around 41%. Either way, not a bad gain. Why I personally prefer UVXY over VXX options: UVXY options have a much tighter spread. I like trading options with a tight spread so you break even and run into profits much faster once the stock starts to move in your favor. Look at the deeper in the money strikes on VXX. The April $17 call currently has a $3 bid and a $6 ask! Ridiculous. I wouldn't touch that. Starting off down 50% right off the bat isn't how I like to play. Now let's look at the April $6 call on UVXY. It has a $2.85 bid and a $2.95 ask. You're only down 3.3% off the bat. You need a much smaller movement in your favor to break even and start to see profits. Remember... what you can sell your option for is the "bid" price, and what you have to pay for it is the "ask" price. To properly calculate profits or losses on any option, you have to go by "bid" and "ask" price... not the "last" price that Yahoo finance quotes.
Yes, timing is key with options. What I do, so that I don't have to babysit my account, is I set my sell orders right after I purchase the position. I look at price history, and put in a sell order that, given the historic movement of the stock, is very likely to trip. Looking at the monthly price movement of UVXY, when I purchased my $10 calls and $10 puts, I was banking on a movement of between $3.50 and $4.00 from the price of $10 at some point before March expiration. On Feb. 26th, UVXY hit $13.84 at one point during the day and the sell order I had in for $3.70 on my calls tripped. One thing I have realized with options is that you're probably never going to get in right at the bottom, or out right at the top. But as long as you get in and out somewhere in between and turn a half way decent profit, you can't get too upset. Create a strategy based on strong historical tendency, and stick to it. If it fails, try it again next month or next quarter if historically it would have worked. Pick a few stocks, get to know them well, and play with them and them only. Some people trade based on charts... I trade based on historical price tendency & seasonality, and have been fairly successful with that. Where I have gotten burned is with stocks that are very much in the public eye, and manipulated by the market makers. FB got me good last November. Ouch. You don't want to know how much I lost. But then again most of us that dabble in options have gotten burned real good once or twice. It's the high cost of learning. Good luck with those $8 puts. They must be looking a little better after today.
If you think we're going to 15-20 in the near future, you clearly do not understand the nature of how this works. UVXY is based off of VIX futures contracts. We have contango constantly working against us. Furthermore, there is "daily reset". We will still get the same percentage moves in relation to the VIX futures, however the percentage is based off of the smaller number (now $8) rather than a larger number, let's say $20. 25% of $8 is only a $2 move, whereas 25% of $20 is a $5 move. That's why, when you look through historical prices of UVXY, you'll see that when it gets down to these levels, the dollar movement per unit is much less than when UVXY is trading in the 20's and 30's. Nothing is likely to get us into the $15-$20 range in the near future. Even if we do have a spike in the VIX, the movement of UVXY at this level is not going to be what you are thinking it will, because we are based off of $8 now (this is called "daily reset").
Yes because in the long term, contango eats away at the value of UVXY. The VIX was more or less steady in the upper teens and around 20 last year. In that same period of time, UVXY essentially dropped from $650 to $20. Sure we get the occasional pop, but short is the only way to go long term here.
Try buying at-the-money strikes with this. It consistently seems to lose a couple bucks a month, and at-the-money puts purchased shortly after options expiration, for the following month, should turn a decent profit. I picked up some March $10 puts on Feb. 22nd for $1.09. Yesterday I could have sold them for $1.80. Not a bad return. Unfortunately I sold them last Thursday at $1.23 but even with that, I turned a 10% profit in about 2 weeks which isn't horrible compared to what banks will give you for a year in a savings account. What I do is a straddle each month. My $10 calls which I also purchased on Feb. 22nd, for $1.23, I sold on Feb. 26th for $3.70. Good luck with your $8 March puts... we've got 2 more days for this to tank.
I sat back and watched as the $10 puts I sold last Thursday for $1.23 reached $1.80 yesterday afternoon. Fun fun!
Best of breed, haha. I take it you're not a truck or bus driver. Their engines of today are some of the worst on the road.
This product, UVXY, is based off of futures contracts on the VIX. If the VIX remains more or less steady, UVXY will degrade in value because of contango, which is basically the time value in futures contracts, which degrades over time. Over the past year (2012), the VIX has more or less hovered in the mid to upper teens, with a brief spike into the mid 20's. But during this very same period, UVXY has in essence fallen from $729.75 to $20.90 (adjusted close price on Dec. 30, 2011 vs. close on Dec. 31, 2012). It is only because of two reverse splits, a 1:6, and a 1:10, that we see the $8.86 price that we closed at today. That is why I say UVXY has no bottom. It falls due to contango in the futures contracts, and will keep falling. When it gets low enough, it reverse splits to make it appear a more attractive investment. This is not to say there's not very good money to be made here. Anything this volatile, and predictable, is a gold mine if you play it right. But buying this with the idea it's ever going to reach its previous highs is nothing more than a pipe dream. Good luck.
There is no bottom. It just keeps falling until it reverse splits, then does the same thing all over again. Do some research on this before investing. Sure we get an occasional pop, but look at the big picture.
Look at the history of his posts... he knows all about UVXY and how it is designed to degrade. I think this post is meant for some LOL's.
There's ways to make money here. I'll play with anything that has a predictable pattern. Look at the historical price history of UVXY.
If you are so positive this is going to go up, why are you buying shares? How about dumping all your money into some $10 calls?