Book It While It’s Hot

When we last left off, I wrote in detail about the long calls I bought for SVXY.  I still have those, and the update is that while they traded for only $4.64 each at the time last mentioned (versus my $8.50 buying price), the bid/ask on those has risen to $7.00/$8.30 as of this writing, with the last trade recorded at $7.49.  I keep under consideration the idea (translated: I can’t wait) of getting out of these calls as soon as I can do so for even money.  All right; it’s not really true that I’m chomping to get out of them. I would have to assess conditions at the time.  My intention is to amplify returns that I would expect to make on a particular number of SVXY shares.  I might make money on neither, though, with the shares simply turning into slimmer versions of their former selves (which allows me to retain some value and some hope for future gain – slim livestock can always fatten up) and the calls turning into dust.  That is the risk I took by buying calls.  I will evaluate the risk every day until I get rid of the menacing things.  I have until January, but dollars and time do not always equate in the way we would like, and I’m not crazy about holding a potentially depreciating asset.  This is the extended-mix way to say I am nervous owning long calls.

I will now revisit a topic too tangential to get into in the last post.  I said, “I did something else with the rest of the proceeds” of some liquidated SVXY shares.  Hmm… I could compare the loss I took on those liquidated shares and see how it lines up with the gain I booked on the following.  But I’m not going to do it, mostly because I bought and sold so many small lots of SVXY during the last several months that it would be meaningless to single out one lot and differentiate it from another.  After all, it is up to me to set “FIFO” (first in, first out) or “LIFO” (last in, first out) when I liquidate shares, and I was not even paying attention to that.  I don’t really care whether my booked gains and losses look pretty; I expect them to even out in the end with real dollars and not just beautiful ledger entries.

So anyway, on September 18th and 28th I sold some shares of TVIX short.  See detail.  It was 360 shares altogether for an average entry of about $11.31.  Today I bought all of those back to close the trade at $9.48 for a profit of $651.

A visual representation, showing the start of TVIX down the side of the mountain, is below:

Then, never content to consider a trade done and over with, I jumped back in less than one hour later (grabbing a little bit of benefit from momentary float upward in TVIX/UVXY) and sold some UVXY short at $43.79.  (By “momentary float upward” I mean that I sold UVXY short at a higher comparative-to-TVIX price than the point at which I had exited the TVIX short.) I may have to sit through some adversity on this, as I did with the TVIX trade.   My purpose in this was chiefly to convert my TVIX short to a UVXY short, with the possibility open that I can sell covered puts against this position if an attractive opportunity presents itself.