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Third lifetime as a trader. First was pure rookie '97-'01. Rode the express. What times. Blow out gains followed by blowout losses. Primarily on penny stocks. Second was March '09 to Dec '11, rinse, repeat with learning how to trade options -- everything, every which way. Over... More
  • Volatility beats bearishness 0 comments
    Nov 5, 2011 5:28 PM | about stocks: FAZ, TZA, VXX
    Here's the recap on the week for financials:  "Financials were also the biggest losers for the week, shedding a combined 5.4%."

    Now, if that were the case, than FAZ should be up 16% for the week, right?  If that were the case, then FAZ would have closed the week at $41.94, from last weeks $36.16 but instead closed at $40.97-- contango at work.

    An update on the strategy-- a rather quiet week of watching the tape and seeing how it works, with a couple of flips in FAZ and TZA underlying, and one in VZZ too. That made a profit of about $5K total. Here's how the short options open profits are standing:


    Down a bit from last week, but that's to be expected.

    In addition to the Jan options, I had sold some naked Nov calls in FAZ and TZA, which I closed last week. So calculating the current break-even point:

    FAZ-- $38
    TZA-- $27.50

    Next week, things could continue in the volatility, which would be great. Right now, here are the break-even point that correlate to XLF, for FAZ, and RUT, for TZA:

    XLF-- $13.50

    Too bad that I have not been pointing that out since the posting here began. If you were to look back OnDemand on ToS, you could find that number continually lowering itself. During this past week, the XLF point went down .22 cents.

    I think a more likely scenario is a decrease in volatility, and a decrease in contango, and a slower grind upward to north of 1300 on the SPX.  76 days to go. 

    Themes: xlf Stocks: FAZ, TZA, VXX
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