Allow me to bellow out a mighty roar. A limit order on UVXY170120P00026000 cleared today at 20.70. Raptors may remember on 13JAN2015 I purchased said option for 18.78 a share. The position was open for 123 days. The annualized return is thus 30.3%. Not too shabby.
As a reminder, I consider UVXY to be the “worst security in America.” Betting against it is a high conviction idea. I prefer to make a bearish bet with options because the direct short has an enormously high borrow cost (shorting UVXY is *very* popular.)
I have been doing some paper trading and feel it will be better going forward to buy puts that are deep out of the money instead of at the money. Since I expect greater liquidity the Monday after “expiry Friday”, I’ll buy UVXY170120P00003000 on Monday and record the cost of contract here. Thirty plus percent average annualized returns are expected.
Devour your prey raptors!