Here are some relevant comments from the Six Figure Investing site regarding XIV:
"With XIV termination (or “acceleration” in marketing speak) relates to daily percentage moves. If VXX jumped more than 100% in a day, then if VelocityShares didn’t terminate XIV its notational value could go to zero. They avoid this particular unhappy situation by terminating the fund if the daily move of VXX is 80% or more—although losing 80% in one day would still be plenty traumatic.
The termination risk for XIV appears to be limited to market crashes worse than the Flash crash. Two examples that come to mind are the 2009 crash and the October 1987 crash. VXX didn’t exist for either of these. I have analyzed VIX data (or simulated data) since 1992—there were 20 days with VIX jumping over 30% (previous day close to intraday high) during that period. The highest percentage jump over that period was 70.5% on February 27, 2007. There were three days with VIX jumps over 30% in the 2008/2009 crash, and during the Flash Crash.
If VXX had existed during this time span, and held to its typical behavior of 50% of VIX’s move it looks like the XIV termination event would not have occurred, but obviously it would have taken heavy losses on those days."
Try to do it above 45. You may get this if there is a retest of the highs. Be sure to scale into this position. When the options are available next Friday, many investors are going to be converting their shares to call options. This is when you should be converting your short shares to put options.
Yes, it would be profitable to exercise my long put options as long as they were in the money. However, there is always the possibility that a ETF could shut down while still having some remaining value to the shares. In this case, all ITM options would be settled for their intrinsic value, while all OTM options would become worthless. Since the net assets of UVXY is so high, there is little chance that this ETF would ever shut down.
Does anyone remember if the last reverse split for UVXY had any effect upon the time premium portion of the options? Since the volume for the adjusted options after the split will drop substantially, one of the problems will be a wide bid/ask spread. I am thinking that just the announcement of a reverse split may have an adverse effect upon the time premium since everyone will immediately begin to close out their options prior to the actual date of the reverse split.
Another issue is the possibility of UVXY being closed down. If this were to happen, OTM options would become worthless. I currently have some OTM Jan 2015 puts. I am thinking of hedging my long puts by selling OTM Jan 2015 calls. Not an ideal hedge, but at least this will protect me in the event that UVXY is closed down.
Looking at the price action for Oct 30-31, the high/low range is essentially the same as that for yesterday and today (Nov 7-8).
There appears to be strong support at 26. At around 11:30AM on Oct 31, it began to rally. Let's see if that will happen again today, especially since banks are having a good day.
Israel and Egypt are at the top of the list for receiving the most foreign aid from the U.S. Is this not a dangerous foreign policy to give financial aid to adversarial countries, especially if the money is used to purchase weapons of war?
Think of the shorts as being the owners of a casino, and the longs as being the gamblers in the casino. Every now and then when UVXY rallies, this would be like the gamblers winning and the casino losing. However, because of the slight house advantage (contango), over time the shorts (casino) will always come out ahead.
I was reading that the new casino in Maryland is making so much money that they pay an average of 1 million dollars of tax revenue to the State every day.
They are now changing Yahoo Finance. The article mentioned that it will include many interactive features. This is what causes the problems in their email.
Since Tesla wants to produce a $30,000 electric vehicle, they should partner with another vehicle manufacturer. Someone like Hyundai or Ford could produce the body and Tesla could install the drive train, battery assembly, and electronics. This would be a lot more cost effective than for Tesla to try and build a new manufacturing plant.
I have been shorting NUGT. Look at the 2year chart and you will understand. Price erosion is in your favor.
When it hit the top of the channel at 180, the big traders sold out. They are probably going to use their money for the Twitter IPO.
It looks like the big money has just left the party.
However, there is still the possibility of a rally today after hours. Your only risk is having to wait until tomorrow to close out your position. Remember what had happened to NFLX.
when looking at the 2 month chart. I am going to close out half of my long position now. Most of the long traders playing this pre earnings rally are not going to stick around to risk their profits if their entry was in the low 160s. After earnings, it may want to retest the previous high. Lets hope this will not be a repeat of what had happened after the last earnings of NFLX.
The price action after earnings could be similar to what had happened to NFLX.
If so, then sell into the AH rally.
After the Alibaba IPO, would this be a taxable situation for Yahoo? Would Yahoo be required to sell their stake in Alibaba and pay the taxes?
A company like Hyundai is very innovative. The could easily build a similar vehicle fo 25 % less, especially if produced in volume.
No. You will not need to buy any long term leaps.
I recommend that you do not buy options too far out in time in order to minimize drawdown in case the share price declines. The idea is for both the put and call to simultaneously erode to zero if the share price remains range bound.
This strategy is one of the best ways to play DNDN for a big move up. As long as the share price remains above 1.50, you will not incur any loss. If you do the spread with the Feb 4.00 calls, then any amount above 4.00 would be your profit since your cost basis is 0.00
For those who are concerned that the share price could collapse to 1.00, try the long Feb 5.50 call and short Feb 1.00 put spread for a debit of close to 0.00
DNDN usually rallies just before earnings.
At least Monday's gap has now been filled. Maybe we will see some upside movement from here.