Happy VIX-entines Day

The funniest part of my last post was the quote from my last sentence, “…VIX, which I doubt will stay the same every minute from here on out…” because it has basically stayed right where it was at the time of that writing more than a month ago.  Spanning 11-13 that day set the tone for the next month, since that’s all it’s done ever since (with the exception of a toe dipped in 14 yesterday), for the next 25 trading days. (*And excepting today as I’ve been sitting here writing this, seeing the return of the fourteens with a vengeance.)

Loathe I am to write a post in which I don’t have anything interesting to report, but I’ll do it anyway.  Maybe some will find it interesting how uninteresting a job I’ve done when there was fruit ripe for the picking but I somehow didn’t see it.  I can’t hit the ball out of the park every time, and this time I simply swung and missed, so let’s get down to the disappointing details:

To sum up the trades, I did a lot of attempted top-picking in SVXY and came home with a basket full of nothing.  But the trying was fun while it lasted.  I color-coded my basic three trades in the chart above.  Let’s start with the red:

When SVXY was $66.15 on July 29th, I shorted 200 shares of it and at the same time I bought protective calls to cover that position for the 66 strike for the August 12th expiration.  Of course, this is not really a covered call; it’s a protective call because it is insurance to mitigate damage, should my short position turn out to be a bust.  I paid $3.00 per share for the right to buy the short shares back for $66 anytime through August 12th.  Since I would only stand to profit fifteen cents for each share if I chose to exercise the calls, my loss at that point, should the trade transpire in that manner, would work out to be $285 per 100 shares of SVXY shorted.  The premium paid for the calls minus the gain made on buying the stock back at the strike price as just described would comprise the maximum loss for this position; in this case $570. Here is the opening and closing detail.  I didn’t wait until August 12th, but decided to close it out on August 2nd when SVXY went down the sliding board and I suspected it might climb the ladder again.  Value remained in the calls, so I sold them to recoup part of their value, and SVXY had declined enough to take a nice profit by buying the shares back to close.  Netting a smaller loss against a larger gain left me with a number in the black:

Small profit in hand, I set out the next day to do some no-hedge shorting and it nearly immediately went bad on me. On August 3rd I shorted SVXY at 65.12 and watched it rocket to 74.16 on August 9th.  On that day I decided to get a little Traders Revenge (AKA doubling down) by shorting again at 73.90.  This worked well to dilute my losings through the one-two punch of shorting from a top plus waiting and happening to be lucky; in fact, had I been a little more patient with the buy-to-cover button, I could have gotten all of my money back (excepting a few measly dollars) later that same day.  Hindsight is perfect, of course, but at the time I had to decide whether to continue in my position of unwise-turned-crazy risk or clear the table and start over again.  In a fit of petulant Traders Remorse (AKA being glad I had recouped a few thousand of the previously 2.5-grand unbooked loss I had been looking at as Traders Self-Inflicted Penalty), I closed the whole thing while looking the other way and holding my nose.  Results:

I moved on to what I thought would be a short-lived exercise in shorting UVXY, and considering that I placed that trade at 3:33 PM and closed it before 10 AM the next morning, it was technically less than an hour in duration (counting only open market hours.)

I could sit here all day and compute losses or gains that could have been effected by holding for different additional time periods, but it would only serve to show that UVXY seems to have done the sideways shuffle daily since about August 8th or 9th.  Since everything I do revolves around volatility –  and I’m not excusing myself in any way here – maybe it’s not coincidental that I’ve done very little that’s notable during the last month.  Here’s my August 10th-11th venture, by the numbers:

A careful reader would notice that I never explained the last notation in the first graphic in this post.  Whatever became of the SVXY shorted on August 19th at 73.71?  Great question.  I’ll write another post very soon (no dawdling/dallying a month between updates this time) to explain what monster that trade has become the essential guts of; I’ll leave a little preview here by saying that I still hold that position short.  As I sign off for today, I just saw SVXY hit the sixties.

Is it Valentine’s Day yet?