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Nathan Buehler
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I have always had a passion for finance and investing. I enjoy and appreciate engaging with like minded individuals that inspire me to think beyond what is generally accepted. My investment experience spans almost ten years. The bulk of my knowledge has come from independent observation,... More
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  • UVXY Short Position Initiated 2 comments
    Aug 9, 2014 12:59 AM | about stocks: UVXY

    On 8/6/14 I posted an update on volatility which you can read here.

    During the overnight period from 8/7/14-8/8/14 VIX futures entered backwardation. Throughout the trading day on 8/8/14 futures were unable to hold backwardation levels and proceeded into contango.

    Current economic data is not glamorous in the United States, but strong enough for me to believe the economy will continue to grow. The Federal Reserve has also promised easy policy. Housing, consumer spending, and wage growth continue to be concerns for me. The current geopolitical events around the world are old news. These are countries/ideologies that have been fighting since before we were born. What isn't old news is continued poor economic data out of Europe. I believe the ECB will be accommodating in trying to jump start the European economies.

    For these reasons I initiated a short position in UVXY using options. I have posted my options strategies on a prior instablog post. The current short position includes naked call options dated Jan 2016. I do this for extrinsic value purposes. It also includes several weekly and monthly put options that expire in less than 60 days.

    I believe we just saw our summer correction in the S&P 500. In the event I am wrong I have initiated a stop loss of 20%. This provides accommodation for possible further appreciation in volatility.

    Thank you for continuing to read all of my articles. I sincerely appreciate it!

    Disclosure: The author is short UVXY.

    Stocks: UVXY
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Comments (2)
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  • ianxponent
    , contributor
    Comments (574) | Send Message
     
    Bought some additional SVXY yesterday but might also try some VXX or UVXY puts on Monday. Thanks for your informative discussions.
    9 Aug 2014, 12:12 PM Reply Like
  • thetortoise
    , contributor
    Comments (110) | Send Message
     
    Good luck Nathan! Appreciate your posting of your strategy! I have been building my ZIV position over the last several days and am holding a small SVXY position (both shares and calls) hedged with OTM puts in case things get out of hand. I am looking at to add to my SVXY position with share purchases and call options depending on what happens Monday. I have a large cash position that I would like to put back to work making a decent return after missing out on so much over the first half of the year.
    9 Aug 2014, 01:45 PM Reply Like
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