I tried to close UVXY today but couldn’t find a buyer at an attractive price.
music selection: “Planet Caravan” — Pantera
weigh-in: 205.0 +0.6
We have gone a long time in this bull market with a correction of at least 10%. Perhaps, it is a record length of time. Measures of investor complacency such as the VIX are at record lows. I think it is time to play a little defense.
Except for three positions in oil and gas that I entered with larger than normal trailing stops, everything is at a 25% trailing stop loss. Today, I updated my spreadsheet to calculate a 15% trailing stop loss. Nothing was triggered for an immediate sale.
Most of my short positions are currently in the red but I’m holding them open. They should perform well when the inevitable 10% or larger correction finally arrives. I am also being strategic to raise cash. When I unload my UVXY puts, I’ll redeploy at a 8% portfolio allocation instead of 10%. I want to have some dry powder to write puts with when the correction comes as steep (irrational?) risk premiums will be on offer.
In the meantime, I am well positioned to play defense. Approximately 40% of the portfolio is in fixed or semi fixed income type positions. Another quarter or so is in strong dividend payers. My projected twelve month dividends, distribution, and interest income is 27,254 or 110% of my projected budgetary need. I’ll continue collecting some modest options trading income, but now is not the time to go all in with selling options as the remarkably low VIX is suppressing premiums.
I hope to be back tomorrow with a successful UVXY trade. Depends on finding a willing buyer.
Devour your prey raptors!