Hitting a single in $SVXY

Editors note – we would like to welcome Meredith Kelley Zidek as a new contributor to the CBOE Options Hub.  Meredith is a private investor whose interests include equities, options, and commodities.  She began trading equities in 2007, and since then has cultivated interests in corn, energy, and most recently, index and equity options. Almost all of her trading, which can be seen on grapestrades.blogspot.com, involves short options on volatility-related instruments.  She studies the movements of world indexes and analyzes options chains to determine advantageous timing for short-selling of contracts.  Meredith holds a B.A. from Loyola University, and resides in Hunt Valley, Maryland.

Sometimes it isn’t the biggest trade that brings the most joy.  Very late Friday afternoon, a casual idea got real so quickly that I rushed to construct an order with only minutes until market close.  Checking the time as I worked, there appeared to be mere seconds left, but I submitted it anyway.   The result is a trade that turned into an instant money-maker that grew to all but 15% of its potential value less than one full trading day after the crazy wish-making order was incredibly filled.

So what do you think I did?  Instead of waiting four more days to find out if the tide would turn against me and if the tide might contain sharks and jellyfish, I just cashed it right in today.  Someone else took ten cents, and I thought I would probably not unload it for five, but in another wish-making fishing-line-throwing, I just cast my line to see if anything would bite.

Instant fill!  No more worries about SVXY holding a knife to me up at the 98 level.  I really, really, didn’t want to be responsible for selling someone $78,400 worth of that security.  Wow, what a way to make $213!  There has got to be an easier way.  (Just kidding.  I’d do that any day, a dozen times over, for $213 while I sit here and exchange bon mots with other traders on twitter.)

In my excitement, I neglected to thoroughly explain this:  The opening order was time stamped received at 03:59:47 on Friday as pictured below, and I assumed it got swept away with the deadwood, but to my amazement, at 04:04:49, the order was filled and this short-lived but fun-filled adventure got started.

sillyme

It’s the timing and the price on entry and exit that made this a fun one, not to mention the way I no longer have to think about SVXY cornering me into some social obligation I’m not prepared to fulfill. I really didn’t want to attend the 98-strike party and was looking for a way to gracefully decline just as soon as I accepted.

July27

If $213 doesn’t thrill you – well, every trade cannot be a ball hit out of the park.  Look back to some of my earlier posts in the month for more exciting fare – and I still have something in the works for this Friday.

 

  • Spike Vixen

    I think volatility is about to head down. It’s been higher than it should be for a while.