This is a market that many want in, and as long as it stays that way, its the best place to be. And for the 3x bear etf's, its the worst place to be. I wasn't able to get into all of those I listed, because a pullback didn't happen. I am not surprised. What I did manage was two of them, along with a volitility vehicle, for shorting in the options.
The holdings are:
VXX: short calls in Dec and long puts in Dec
FAZ: short calls in Jan and long puts in Jan
TZA: short calls in Jan and long puts in Jan
I've a delta positon of about 1000 for FAZ and TZA and 800 for VXX. There is a lot of upside to be made in the downside given the trend in place now.
Here are a few of interesting developments since I initiated the trade that I'd note:
Holding the short on options allows me to go long on the underlying without near the amount of anxiety about entering and holding a profit as under usual circumstances. An example. On Friday, Oct 14th, before the close, I took out a short position on FAZ of 1000 shares, effectively delta neutral positioning. On Monday the market gave a long red candle, and I was able to sell that FAZ much higher than I bought, from about 51 to about 55. The trade didn't profit me $4k, as I lost that amount of paper gain on the short options. What it did do was effectively put the profit in the bank, or, looked at another way, lowered my breakeven point on the FAZ options by $4. This was my first experience of trading delta neutral, and I could tell from the experience that it will not be my last.
I was able to add TZA to the list in a rather risky, but ultimately profitable manner. Also on Friday the 14th, I bought 1000 shares of TZA at 36. On Monday, when TZA hit 39, I took out a short position on TZA of 1000 delta. Since I'd just made $3K on TZA, I effectively managed a 42 entry. Now, that was about the same price I could have gotten last Monday, after the initial post here, so I'll take it.
I also performed a similar trade with VXX as the above, entering and selling shares for a net gain of $2 to the underlying profit. I've a smaller delta there of 800. I am not quite as comfortable with VXX as with holding these 3x bears, and this is just through Dec, but I will hold to it regardless as its profitable.
Now, in managing the trade, I have to contend with days like today, the 18th, where FAZ moves to the downside back into the 40's, and TZA to the mid 30's. I have gotten used to now putting in triggers to buy the underlying and go delta neutral. I have them placed a few dollars above the current price, at least. I will likely widen that with a few days or a week of sideways to up action by the overall market. The delta neutral strategy is nice for adding a bump to the bottom-line of profit, but you can imagine how it can also take away if ill-timed.
I am looking out for another candidate to add here by the end of the week.