I rolled my long UVXY put position.
music selection: “I Saw The Light” — Todd Rundgren
UVXY is a horribly designed security. It should be criminal. The ticker attempts to track the daily movement in the ^VIX by purchasing the 14 and 40 day futures on the ^VIX and rolling the position daily. Contango in the futures markets ensures that most of the time, they will sell a “cheap” asset to buy a more “expensive” one. They compound the misery by using double leverage. The security falls around 85% a year with great consistency. I have come close to covering my entire budget by betting against this dog.
On 1NOV2017, I purchased UVXY190118P00010000 for 5.55 a share. The underlying was around 15 making this about a third out of the money. My position moved into the money this week and I have been looking for an exit since. Today, I sold the puts for 6.35 a share. The trade was in force for 63 days and yields 83.51% on an annualized basis. I cleared 4,400 in profit on 55 puts.
I rolled down and out to UVXY200117P00006000 for 4.35 a share. I bought 76 contracts for 33,060. I’ll be looking to sell somewhere around the point UVXY hits 5.15. This will probably be on a split adjusted basis as the underlying is overdue for another reverse split.
This is my highest conviction trade and has made me reliable 50+% annualized returns for years. I’d likely not be FIRE without this trade.
Devour your prey raptors!