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Rock228
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I trade volatility ETPs, occasionally S&P 500 through SPY or UPRO and invest long term in Dividend Growth stocks with high dividend CAGR values. Individual stock picking is a waste of time to me unless the company pays out large and high growth dividends.
  • END OF YEAR VIX STRATEGY  44 comments
    Nov 22, 2013 2:02 PM | about stocks: SVXY, UPRO, XIV

    FED MINUTES PLAY (oops!!)

    First off I apologize for not updating beforehand so you all could join me in making money on SVXY. But for the future be aware that there is a great play when Fed Minutes come out. They always come out on a Wednesday at 2PM and usually the VIX moves higher leading up to the release, things go squirrelly after the release until about 30 minutes before the close and then the VIX rolls over and the market goes higher into Friday. So the play is buy SVXY (and/or UPRO) 30 minutes before the close on Fed Minutes day and ride it out until Friday just before the close. That is the trade I am currently into and am up 3% as I write this (I got in Thursday morning…too busy on Wednesday) and would be up almost 5% had I bought Wednesday. Remember this for the next Fed minutes January 8th 2014 (although the Government funding lapse for Jan 15th might hinder this trade so we will have to wait and see).

    Why does the play work almost every time? It is the same for almost all of the scheduled macro events. The market simply fears the unknown. So it gets jumpy heading into the release, freaks out for an hour or so and then continues its normal trajectory. Knowing the news, even if it is bad, allows fund managers to take off their SPY protective Puts and either stay neutral or go long. How well has the Fed minutes play worked? The last 4 times the market has been up between 1.2% and 2.8% from Wednesday close to Friday close. Very nice.

    Caveat to the following trades- Remember past is not certain to predict the future. December is a squirrelly month for VIX. Although it tends to stay very low it does pop up here and there for "random" reasons. Money managers do A LOT of window dressing and return chasing near end of year. Add on to that many people (incorrectly) think QE infinity could be tapered in December. This month will be tricky so tight stops and quick trades are a must. Viewer discretion is advised!! - AKA - don't gamble with money you are not willing to lose!

    WHAT'S NEXT? DECEMBER JOBS RELEASE

    The play is to buy SVXY less than 30 minutes before the close on Thursday Dec 5th. Buy a ton if the VIX is at mid 13's or higher, only buy a little if the VIX is still in the 12's. Sell SVXY between Friday Dec 6th and Friday Dec 13th. The sell dates are up to you and depend on your level of risk. Typically the VIX rolls over from that Friday through the following Tuesday but I don't think it will hurt to hold longer because there is no head winds to upset the market until the Dec 18th Fed meeting. Why Friday the 13th (besides it is a spooky day)? Because the VIX and market tend to react to FOMC meetings sometime on Friday before the meeting or the Monday before the meeting. To be safe, get out by Friday morning Dec 13th.

    DECEMBER FOMC

    Buy SVXY Dec 18th before the Fed announcement approximately 30 minutes before. Sell from Friday Dec 20th until Tuesday Dec 24th. Historically it works really well up until Friday the 20th. Again, I think it can work up until Christmas eve this year so choose your path. People will fret, the news will be no taper and the VIX will roll over and show its belly.

    END OF YEAR BOUNCE

    Buy SVXY and UPRO Dec 31st and hold until January 10th or about 3% higher on S&P 500. For the past 4 years buying at the close on the last trading day has made you a 3% profit on S&P 500 by mid-January. Some years it rises exactly 3% and then pauses. Freaky. Depending on the level of the VIX determines how much SVXY vs UPRO you buy. The higher the VIX the more SVXY you buy and the less UPRO. I plan to put a very big chunk of my money behind this play. I strongly recommend starting to sell after a 2% gain on S&P and be completely out before we hit 3% gain. Like I said, one year it almost hit 3% to the penny and then reversed so waiting would have made you lose some of your gains. You should get a nice 6-10% gain on this play.

    I say sell by January 10th because of the Government funding that ends on Jan 15th. I don't think the GOP will play games this time and I think the market will mostly ignore that date until we hit it anyways, but just to be safe sell early. Always minimize risk while maximizing gains. I would rather leave some % gains on the table then take the risk of losing my profits. There is nothing wrong with taking many smaller gains. If you always make a profit then compounding becomes your friend!

    I will update if I see things change and on the trade days if I am able to.
    Happy Hunting!

    Disclosure: I am long SVXY, UPRO.

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Comments (44)
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  • thetortoise
    , contributor
    Comments (104) | Send Message
     
    Excellent post Rock! I am currently moving to a platform that will allow for more nimble trades for this very reason - tight stops and careful monitoring is a must as the expected outcome can change unexpectedly.

     

    VIX behavior in the QE environment just continues to astound me with its seeming predictability.

     

    One question - I might be getting greedy with all of the outsized gains in the last month, but it seems the predictability would allow us to play both sides of the equation - for example when you are selling SVXY up to December 13th - would replacing it with UVXY or VXX in the following week - perhaps on the 16th, and selling prior to the announcement, allow you to boost your gains even further?

     

    I am really interested in this play in January with the debt ceiling fight, though if that fight doesn't happen the play is of course a bust.

     

    I agree with all of the proposed trades and am particularly looking forward to the New Year's rally now that UPRO is available to really start the year out right at 3x leverage. Fully knowing it might not play out, and maybe this is the year everything falls apart - I do believe the odds are in our favor. Here's hoping for a great start to 2014!
    24 Nov 2013, 10:19 PM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » Tortoise - Playing the rise in VIX (in my opinion and experience) is to hard and not worth it. IF I was playing it I would do a VIX Call Spread (I did that for Oct with success) and only do it for planned crises and certain FOMC meetings. Like maybe the March 2014 FOMC where many will expect a Taper. I just can't accurately model the rise and you are betting against a huge hurtle of contango and roll yield. I am 50/50 on making profits for VIX moving up but I am 100% at making profits when the VIX falls. Why fight it?

     

    If we have a major correction, VIX goes into backwardation then yes you can play VXX and UVXY long until VIX goes out of backwardation. I will post if I see that but not likely during QE infinity.
    25 Nov 2013, 12:08 PM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » Sold all my SVXY. 2.5% profit on 4 day trade. Too busy to buy on Wednesday or I would have made 4%. Waiting for Jobs number play, 6 trading days away. Want to see VIX move higher into Thursday close next week. Will evaluate then.
    26 Nov 2013, 07:16 PM Reply Like
  • VTH
    , contributor
    Comments (127) | Send Message
     
    Rock, Nice. Will try to follow.
    27 Nov 2013, 03:54 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1870) | Send Message
     
    @rock Good stuff, thanks!
    28 Nov 2013, 09:32 PM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » Pivot day. Big sell signal today but need follow through tomorrow or Wednesday to confirm market top. I would sell to be safe until coast is clear.

     

    VIX rising day after day, above 14 now. Other indicators falling a ton. Market is misreading taper, it won't happen in December. Might have to hunker down until a ho-hum jobs number this Friday or worst case until Dec 18th Fed meeting. Need more data to confirm which way we go but if I can't tell which way we are going then it is best to be on the sidelines counting your profits in my humble opinion.
    2 Dec 2013, 08:46 PM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » Sold it all. 100% Cash. Waiting for good entry. SVXY jobs number trade still on the table but no more than half a position.

     

    ScoreCard - Buying Oct 16th UPRO and SVXY until I told you to sell got you 13% UPRO and 17% SVXY returns. Very happy with those returns. Now is the time for patience, not greed. Need to evaluate each trade as they come because December is such a crazy month with people selling for tax loss purposes, trading into winners, selling losers, etc. Very "volatile" month and hard to predict with so many Macro events coming up.
    3 Dec 2013, 11:42 AM Reply Like
  • thetortoise
    , contributor
    Comments (104) | Send Message
     
    Great call on the pivot day Rock! We just pivoted down in a big way. This is a great day to sit in cash. This is good confirmation of your previous comment on playing the upside of volatility as well - the spikes are just too fast to catch on the way up. I looked away from my screen and when I looked back UVXY was up 8% from 3% or so earlier. VIX spot at 14.73 and it's only Tuesday - should be an interesting week...
    3 Dec 2013, 11:55 AM Reply Like
  • VTH
    , contributor
    Comments (127) | Send Message
     
    Rock, Great Call. Sold all of mine.
    3 Dec 2013, 12:06 PM Reply Like
  • billrider321
    , contributor
    Comments (3) | Send Message
     
    What would be good entry in svxy ...may be when vix is at 18 to 20 range...would you do spread..I am planning on buying calls
    3 Dec 2013, 10:13 PM Reply Like
  • rodh7858
    , contributor
    Comments (138) | Send Message
     
    Rock - What is your view on if and when Fed will taper?
    4 Dec 2013, 06:43 AM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » Tortoise - To hard for me to play UVXY except on man made macro events like debt ceiling, fiscal cliff, etc. Just not worth it to me.

     

    billrider - For sure if VIX gets that high its a good time to buy some. I look for the absolute tops and once my indicators tell me its a top on VIX and bottom formed on SVXY I will post on Stocktalk and on instablog that I bought. Can't give you a number or day to buy SVXY, I use real time data and recent past data - no charting, etc. Options work great unless you are wrong on the direction....I generally don't use options and only a small % if I do (5% max).

     

    Rod - I can't pin down a date. Hard to predict how foolish these central planners are. It is possible in March they taper but by then the deflationary pressures could be so high that it is just as likely they increase QE in my opinion.

     

    The best I can say is not December. And they will hold out as long as they possibly can because there is no prize for getting it right but if they get it wrong........so they will default to keeping QE infinity. Honestly I would be shocked if QE isn't still going on even a little bit per month by the end of 2014.
    4 Dec 2013, 03:57 PM Reply Like
  • William Andrew
    , contributor
    Comments (60) | Send Message
     
    Rock,
    Is the top in vix simultaneous with the bottom in svxy, or is there a delay? In my account, I can do a conditional buy of svxy if vix is greater than or equal to X. Because the spike happens so quickly, would it pay to automate in this fashion? One could set multiple buy orders at various vix levels such as 18, 19, etc.
    4 Dec 2013, 08:08 PM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » William - Yes it is within a % or so (VIX top = SVXY bottom) since the housing bust. I look at the closing VIX data and that gets you close enough to buying at the right time but if you want a trigger buy then go for it.

     

    The concern I have is what if 18, 19 and 20 doesn't end up being the top in VIX. What if we get a 10% correction and 30 is the VIX top. Or 20% correction and 45 is the top? For those very unlikely events I wait until I can verify a top. Sure I miss out on a few % here and there but I can still compound over 100% returns/year doing these trades. Why be greedy :)

     

    The drawdown on 20% correction in 2011 was about 70%. And half of that loss was 10-12 trading days.....Better safe then sorry in my book. Personally I would just buy say 25% or 33% of your position and wait to see a confirmed top before buying more.
    4 Dec 2013, 09:45 PM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » I am backing away from the Jobs Number play. The whipsaw of the market is causing my crystal ball to go fuzzy!! The Fed meeting is a definite play and I am very happy with my gains so far this year so I sit in cash.

     

    ADP report was really good. Jobs number on Friday could be really good as well, will everyone think that means a December taper which freaks out the market and VIX spikes? Today indicates that is a reasonable assumption. I don't want to play something unless I am as close to sure as I can be.

     

    Maximize returns while minimizing losses. When in doubt, sit it out!
    4 Dec 2013, 10:08 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1870) | Send Message
     
    You are good! I decided to play this, even if I agree w/ your thesis. Learning by doing. Having a position forces me to pay very close attention. Thus far looking good.
    6 Dec 2013, 10:03 AM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » Congrats to anyone who took my original advice and bough SVXY at the close on Thursday. :)

     

    I sat this trade out. Waiting until Fed meeting Dec 18th. Lots of potential there as well.
    6 Dec 2013, 02:08 PM Reply Like
  • VTH
    , contributor
    Comments (127) | Send Message
     
    Rock, any idea why market is up for 203K jobs. Is it not enough to taper or market is ok to embrace the taper with economy doing well.
    6 Dec 2013, 02:49 PM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » One day can't tell you much. Market down 5 days in a row is a large deviation from trend, it was bound to go up for atleast a day. I need a day or two to tell if this was a relief rally, blow off top or a bottom to trend higher for santa rally. And because Fed is 8 trading days away it makes it that much harder to predict when a big macro event is coming.

     

    There is still 0.001% chance the Fed tapers in December. With the data being so good I still think the market will NOT get the message of no taper and will react by the 18th. I would be very surprised if the VIX isn't in the mid 14's or higher by then.
    6 Dec 2013, 08:31 PM Reply Like
  • VTH
    , contributor
    Comments (127) | Send Message
     
    S&P futures are up for 203K Jobs. Does market think its not enough to start taper?.
    6 Dec 2013, 08:41 AM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » Next week will be interesting. VIX at 15 for 3rd day in a row. It doesn't stay at 15 long during QE and always moves higher from here IF coming off of a recent low (IE - 15 is the most recent high). Every single time higher. Go look at a chart. There are always firsts though so this isn't a guarantee but if I was a betting man (I am)....

     

    With the VIX futures curve right on the edge of going out of contango if we have a nice move higher on the VIX next week SVXY will tank and give us a great entry point to ride back up. That's the play.

     

    I think it is likely to happen because we got just what I thought - a flat or up day coming off of 4 straight down days. We were due for a relief "rally" day to fake out some premature bulls. Should be a fun week! I still say almost zero chance Fed tapers in December.
    13 Dec 2013, 09:57 PM Reply Like
  • VTH
    , contributor
    Comments (127) | Send Message
     
    Rock, thanks. Should be interesting week.
    15 Dec 2013, 07:40 AM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » Plan:
    Buy 50% SVXY before Fed.

     

    No taper = buy 50% more SVXY after announcement. = 100% in SVXY

     

    Taper = sell original 50% in SVXY. Wait for better entry. If there is a taper, even a $5B one, I don't want to play in that sand box until things settle down. I can't model for taper (no one can, it has never happened before). My guess is a 5-10% pullback in the stock market as the market will start to price in QE ending and push the date when interest rates will rise up a few months.......I still say there is less than 1% chance they taper now. We shall see.
    17 Dec 2013, 12:03 PM Reply Like
  • VTH
    , contributor
    Comments (127) | Send Message
     
    Nice, sensible approach. Agree no one knows what will taper will bring.
    17 Dec 2013, 12:12 PM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » I love being wrong and still making lots of money on SVXY! Fed taper (paltry $10B) and market loved it mostly because Bernanke said they can increase QE if needed and moved out the time period when they will raise interest rates (they won't raise until forced by inflation rate).

     

    You can stick with this trade like I said before until at least Friday close. I plan to own some in to the new year. At some point UPRO or TQQQ will work better overall. Probably move to 50/50 SVXY and UPRO or TQQQ.

     

    Work was sooo busy I didn't get to take full 50% before Fed announcement and missed getting below $129 buy after Fed announcement. Stupid work cost me thousands of dollars again! LOL

     

    I am 100% in SVXY for my trading accounts. And 100% long S&P 500 as of Tuesday close in my 401k. 1.6% gain in one day is better than most people do in a month! :)

     

    For clarity - the reason I said to sell SVXY if they taper is I had no idea how the market would react to taper. It's never happened before. So I didn't want to say "buy buy buy" like Cramer and then everyone get crushed and lose money. Hope you all made mucho dinero!! Merry Christmas.
    18 Dec 2013, 09:01 PM Reply Like
  • thetortoise
    , contributor
    Comments (104) | Send Message
     
    Today was a great day Rock! Glad to see you got in, I was hoping you were holding when the $10B taper was announced and continued to hold afterwards!

     

    I went into the day holding a number of UVXY and VXX puts I had been accumulating over the past several days that totaled around 3.5% of my trading portfolio. Mid morning I picked up a 3/5 position in XIV at 31.40 and had to go to a meeting that was scheduled right through the announcement (the horror!). I managed to sneak a look at my phone around the time I expected the announcement and saw XIV up quite a bit so I assumed no taper (and then stopped freaking out!). I also couldn't get the last 2/5 into XIV because of this meeting.

     

    Still, the single best trading day of my life. Just unbelievable. I locked in gains on most of the options before close and am still holding XIV. My XIV position is 3 times as large as I held in October when we did this the last time. I am also holding some 'lottery ticket' VXX puts that are up 3,133% on the day (ok, so I threw $100 into that one so not leaving the workforce, but still fun!) I maybe should have held some of the other puts but I just couldn't resist locking those gains. So now I'm sitting on a substantial cash pile with the portion I never deployed into XIV today plus the option gains. Can't wait to see what tomorrow brings - Merry Christmas and thanks again for all of your posts Rock! These trades are just crushing it - you turned a good year into a phenomenal year for me!
    19 Dec 2013, 01:09 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1870) | Send Message
     
    That's great, congrats!

     

    I was also in 1/2 on $SVXY leading to the announcement averaging around $122. But then we immediately had a very sharp drop when they announced taper and I quickly sold at $1 loss., considering myself lucky to get out... And then it shot back up again within a 30 seconds or so and I bought back in to the upswing (thinking that if that how the market sees this, no matter what, the movement will be strong, so let's ride it), eventually averaging at $127. So my quick tricker finger lost me roughly half of my profits but still I am very happy. Now waiting for a good exit point, let's see how high this rides...

     

    All this is good stuff...learning a lot...
    19 Dec 2013, 07:45 AM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » I am selling all my SVXY Friday before the close. Did not realize Friday is triple witching day. Staying long stocks in my 401k.

     

    The last 5 times of triple witching SVXY went down the next week. Probably just a coincidence. I would rather count my profits and get back in on Dec 31st near the close for the year end rally.
    19 Dec 2013, 04:29 PM Reply Like
  • RJL1955
    , contributor
    Comments (284) | Send Message
     
    Rock:

     

    The Spot VIX has gone down nicely and there now is a decent spread of 6% between spot VIX and front month futures and about 7.75% between second month and front month.

     

    While these spreads are not large as compared to the past average (about 8%), we are reaching a good time in the market (next 2 weeks) where budget bill is behind us, Congress on holiday, historical strong time for the market and historical low period for the VIX.

     

    Thus, I am keeping my SVXY until we get closer to the debt issue in February.

     

    Best wishes,

     

    Ralph
    20 Dec 2013, 03:22 PM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » Sold all my SVXY for only a 2.6% gain. Work got in my way getting in, could only get 30% in before Fed and got in so late after Fed that I barely got any profit on the other 70% buy. 2.6% profit is better than nothing so I will look on the bright side and call it a win and a learning experience.

     

    Dec 31st play will be UPRO and TQQQ not SVXY (still evaluating). More to come.
    21 Dec 2013, 08:19 AM Reply Like
  • RJL1955
    , contributor
    Comments (284) | Send Message
     
    Rock:

     

    I sold all my SVXY when SVXY decided to drop below 12.50.

     

    While the vix may stay in the low 12's or 11's for another day or two, my trading history tells me that this is a very good exit point for SVXY.

     

    Santa Claus rally is continuing and may continue tomorrow. However, I believe that we are not getting any tax related selling at year end (because of the large gains this year) and we may get some selling in the first few days of January (people deferring their tax from 2013 to 2014).

     

    I am actually hoping for this, as this would create a new buying opportunity for me.

     

    Happy New Year,

     

    Ralph
    26 Dec 2013, 04:52 PM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » RJL - I should have held on SVXY longer. Oops. Congrats on your trade.

     

    I am concerned with the VIX so low that this Santa rally will allow that 3% January pop like we had in the past. I think Monday and Tuesday will be telling (Dec 30 and 31st) when many of the big traders will be back from vacation and how they react to 3% yield on the 10 Year note.

     

    That being said I just can't bet against the strong history, QEinfinity and people looking at a 30% gain in the market sitting in low return funds who will want to get a piece of the market next year.

     

    I am still planning on buying more Dec 31st but I might hold back 20-30% in cash. Buying UPRO and TQQQ at least 70% long but monitoring VIX indicators like a hawk for any pullbacks and will sell if I see a "top" and post as soon as I can.

     

    I pray for a 10% pullback. If we get a 10% pullback this year we can make 40-50% on the rise back up in less than 90 days. Lord, please give me a 10% pullback!

     

    Going to try and write up a scoreboard article for 2013 showing how I did and how I plan to play the market going forward. Hope you all had a Merry Christmas!
    27 Dec 2013, 05:12 PM Reply Like
  • William Andrew
    , contributor
    Comments (60) | Send Message
     
    I may have held SVXY too long. Even though VIX was getting down to 12.5 on Thursday, it looked like it had another good day based on the VIX term structure. But, I was wrong and it was down on Friday. I'm hoping to get out Monday without too much of a problem.
    Rock, what indicators do you watch besides term structure to determine the top?
    Also, how will you play a 10% pullback? Will you use options or just go long SVXY, UPRO, etc.? How do you know when to buy?
    Finally, do you know anything about after hours trading? Is there ever a reason to use it?
    Thanks for all of your articles. Really looking forward to your scorecard article for 2013.
    Happy New Year and happy trading!
    29 Dec 2013, 12:13 AM Reply Like
  • thetortoise
    , contributor
    Comments (104) | Send Message
     
    I was in the same boat William as I was trying to squeeze out just a little more gain but ended up wiping out my Thursday gain on Friday so that's what I get for saying "just a little more please". I did end up selling all of my XIV position on Friday as I watched it drop as I wasn't sure where the market was headed and wanted to lock in my gains. I keep debating whether I should have sold. Monday could just as well be an up day for SVXY.

     

    Rock - I was wondering the same thing about the 3% gain in January with the recent run-up. I was hoping you would comment as I'm sitting with 99.9% cash and another nice rally seems less likely than it would have been had we churned over the last week rather than gained so much, so was really unsure what to do here. It's good to know the odds seem to favor another little run to start the year off with a bang! A 10% pullback would indeed be the final Christmas miracle, though it's good to know the plan in case that doesn't happen. Looking forward to your article on 2013 and thoughts for 2014!
    29 Dec 2013, 12:41 AM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » William - Top and bottom spotting is really hard to explain. I spent months and months graphing and tracking the S&P 500 and the VIX and its term structure. It is not an exact science and hard to explain. Easier just to post on here when I see it. Tops are tougher to call, bottoms are not too hard. I do not use after hours trading. Wild west, not for me.

     

    If we pulled back 10% and I for sure had a bottom nailed I would buy ~ 60% SVXY, 30% UPRO and 5-10% VXX puts just out of the money as close to 20 trading days in the future as possible. Those VXX puts during QE at a defined bottom has worked everytime. And 20 days out has yielded 200%+ average return.

     

    Tortoise - I can't fight the trend but let's wait and see what happens on Monday and Tuesday to evaluate. The 3% 10 year really isn't that big of a deal....but....sentiment matters and if people think it is a big deal..then it is.

     

    The end of year trade is not based on anything but historical trends. Period. In the past the VIX was higher and usually much higher at this point....so.....I am on a windy corner on this one.

     

    I have to be long this market until the market tells me to not be. So my consolation if I am wrong about the year end trade is I can usually spot the top within 1-2%. If we do pullback I can sell it all and try to get the bottom within 1-2% and ride the lightning back up. As long as you limit the losses and then hit the bottoms you can make way more on the way back up than you "lost" on the way down.

     

    Example - Market pulls back some and I "lose" 6% because I couldn't spot top until 2% market pullback. The market pulls back 4%...I get in 1% from the bottom (so really only saving 1% of the pullback) and ride the market up at least 5% or 15% for us triple longs. Net gain of 9%. That's if we only had a small pullback and I did only an average job of calling tops and bottoms. So I don't worry to much about a pullback. A 10%+ pullback would be a dream come true because my investment timing makes the most money on the VIX cycles. We need a VIX pop to 18+ to help us out!
    29 Dec 2013, 08:43 PM Reply Like
  • jamesingram32
    , contributor
    Comments (542) | Send Message
     
    Just took a smallish position in SVXY at $133.27, to try this out. thanks for the article Rock, and input, Seppo. Will report back on progress/outcome.
    Happy New Year All
    31 Dec 2013, 03:17 PM Reply Like
  • jamesingram32
    , contributor
    Comments (542) | Send Message
     
    oh, just to say also, my finger hovered over the button on 1.6k of $133 Jan 3 calls which were $1.75...I did not have the nerve to do this, although, just out of interest for you SVXY guys, these, 30mns later are now at a $2.60 bid....Happy not to have taken the risky trade though. Therin probably lies madness. ...but it is an extra dimension to consider in this trade.
    31 Dec 2013, 03:54 PM Reply Like
  • VTH
    , contributor
    Comments (127) | Send Message
     
    Jan 3rd is little bit risky IMO.
    31 Dec 2013, 04:22 PM Reply Like
  • Rock228
    , contributor
    Comments (571) | Send Message
     
    Author’s reply » James - I have been tempted to try a very short trade (less than a week) in VIX ETN options. Never had the courage to do it - yet. The next time we have a well defined top in the VIX I might try to take a very small position like you mentioned above :) If you aren't nervous before you push the button on that trade then you are doing something wrong!
    31 Dec 2013, 05:31 PM Reply Like
  • jamesingram32
    , contributor
    Comments (542) | Send Message
     
    Thanks Rock, et al for the comments and options feedback. I'm up just 150 bucks today, the calls would have been >1000. Still, I shall stay following you, and perhaps try on the next event.

     

    Happy New Year
    31 Dec 2013, 07:04 PM Reply Like
  • RJL1955
    , contributor
    Comments (284) | Send Message
     
    I have done a weekly trade on Tuesday.

     

    After that, my guts gets ahold of me and forces me to use the next weeks option (at a minimum).
    31 Dec 2013, 06:13 PM Reply Like
  • thetortoise
    , contributor
    Comments (104) | Send Message
     
    The only options that have expired worthless for me thus far were a few UVXY puts I bought a bit too early with less than a week to expiration. Another week and I would have been golden like all the other puts I opened at the same time. A few hundred dollar lesson in how time is not your friend with the weeklies.
    31 Dec 2013, 06:19 PM Reply Like
  • jamesingram32
    , contributor
    Comments (542) | Send Message
     
    well...possibly, so....Bernanke speaking today was the bigger event this time, not Jan 31st?
    Next time I need to look at the calender of events, a little more closely.
    All good though. Cheers
    3 Jan, 03:31 PM Reply Like
  • jamesingram32
    , contributor
    Comments (542) | Send Message
     
    I may be premature on this, but I've just sold my little SVXY trade at $138, for @3.3% gain in 10 days.

     

    Thanks for introducing me to this Rock. I will return for the next Bernanke/Yellen speech. Please do keep us informed of your thinking.
    9 Jan, 12:32 PM Reply Like
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StockTalks

  • All in at the open 80% SVXY and 20% UPRO. Staying super long until 202 SPY ~2% above old high.
    2 days ago
  • Sold $UVXY and $SPXU. Long 20% $SVXY and 20% $UPRO from last week.
    Aug 11, 2014
  • Staying with my $UVXY and $SPXU. Think tomorrow could be a washout day lower. Risk off over weekend. Waiting for trigger to show $SPX bottom
    Aug 7, 2014
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