I rolled UVXY puts today.
music selection: “The Rest For The Wicked” — Sohodolls
On 17JAN2017 I bought 20 strike puts with the 18JAN2019 expiry for UVXY for 12.95 a share. Today, I was able to sell those puts for 13.60 a share. The trade was in force for 28 days and yields 65.43% annualized.
I have moved down to the 13 strike with UVXY190118P00013000 at 8.20 a share. I bought 20 shares in my tIRA account and 35 in my taxable account. Target holding period is 30 days but that may be shorter if the puts move into the money sooner than that.
The average return for the two closed UVXY positions so far this year is 46.17% annualized. Since I target 10% of my portfolio in UVXY puts, I’m on track to add 462 basis points to my annual return.
This trade remains my highest conviction idea. The ETF is constructed to buy the 14 and 40 day futures and roll them daily. Contango in the futures markets ensures they will typically sell a “cheap” asset to buy an “expensive” one. Decay of 90% of the fund value a year is virtually certain.
Devour your prey raptors!