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SVXY

SP 500 "weekly view"SO obviously we are in the supercycle 5th wave. Inside that, we are in the 3rd wave. Inside that 3rd wave we have just completed the smaller degree 4th wave (even thought it felt big) and are about to trek up for that smaller degree 5th and complete the larger 3rd wave. The drop for the larger 4th should be huge and impulsive just like this last drop. I was expecting an impulsive drop because of the wave 2 corrections being long and slow. So the same goes for this next drop. Timing it is not something I wish to really do right now, except that if the larger cycles are still about correct, then it could start with a September rate hike and end towards the end of the year. GL
SP:SPXLong
by SalN
1
sp500 a little moreI think I can see it.. Yes this has been very tricky. When I see it bust through then I wait to see what the market wants to show me and adjust. As you can see,....IT APPEARS...LOL....like we are if the final wave 5. Today was a small wave 4 and we should move up in the next day or two. Since the larger wave 1 was the longest, wave 5 cant be longer than wave 3. So there is the FIB measurement for wave 3 and as you can see, there is a nice 2900 number just below the 100% wave 3 measurement. Can this be it finally? I think so. This correction (once it get started) should be a good one. But I really think the first part down could be only 5% for the A wave. Then of course the annoying B wave. And that should take us into March or possibly all the way to April before the much bigger 10 - 15% wave C. Ill try me best to time it based on the B wave back up.
SP:SPX
by SalN
1
Volatility to return in 2018!SuperTrend buy signal triggered. We have crossed the rubicon and are now at market levels where retail investors and permabear "professionals" who have been sitting on the sidelines during this most hated bull market in history are compelled to throw in the towel. As they finally re-enter the market, it will lead to increased volatility and I expect up to a 10% correction in the major US indexes in the first half of 2018. Additionally the short volatility trade is extremely lopsided and will not take much of an uptick to unravel. While I do expect volatility to increase significantly from major lows this year, it doesn't mean the major US stock indexes will be negative at year end. To the contrary, I expect more all time highs as the year progresses alongside an uptick volatility which will be a scenario most have not seen often.
CBOE:UVXYLong
by mcostigane
SP500 "Very long term projection" Weekly ChartSO please do not mind the messiness of this chart as I had to go to the weekly view and zoom way out which squishes everything together. I made a long term chart about a month or so ago and realized that my topping date was incorrect. You see, I truly believe that Trump will not get re-elected for a second term and I am using that as the trigger date. Just my guess on that. I originally, mistakenly thought that the election date was November 2019, but it is really 2020. So I had to move the election line and have two channels for two possible target areas. (obviously this is just a guess but lets have some fun shall we). The first black lined channel is narrowing as you can see. This is the line that hits the tops of this long bull run that started in 2009. If we only maintained that channel then the top of that channel by election time is around SP500 4300 - 4400 which should equate to DOW 38,000 - 40,000. (Not too shabby if you ask me). BUT. Does that really look like a parabolic bubble phase that has been spoken so much about. No it does not. SO what is the market capable of. I went back to the 1990's and mapped out the trajectory of price for that 5th wave of the large 3rd wave. That is what a bubble parabolic looks like. So first I took the bottom line of the channel and copy/pasted it to make an alternate upper channel that is parrellel. Then I took the 1990's price action and placed it to cover the next 3 years. And what do you know, that looks like a very good parabolic bubble phase and coincidently reaches the top of that upper channel around election time. Wild guess, I know. But why not. If, as you can see, we happen to reach that area then that would equate to DOW 48,000 - 50,000. And that is how these people have come up with Dow 50,000. At that point Gold should be bottoming at that point and everything should be in a bubble. I would be selling my house around that time if this transpires and buying a ton a physical gold and silver. GL
SP:SPXLong
by SalN
15
SP500I think we will get a little more of a drop early next week before we push up. This consolidation is taking a long time so I have to adjust the target accordingly. I read a very brief but probably very true tweet about end of year profit selling. This guy said that there will be minimal selling for the end of 2017 because people are probably going to hold off until January 2018 to take advantage of the tax cuts. Well that makes sense. There is a small short term bullish divergence forming. We still have not resolved the long term very large bearish divergence but that might happen in January like that guy said. Time will tell. Be ready.
SP:SPXLong
by SalN
5
THE WEEK, MONTHS AHEAD: VIX, VXX, UVXY, SVXYAs 2017 comes to a close as one of -- if not the -- lowest volatility years ever on record for the S&P and Nasdaq, I'm not hopeful that this low volatility won't continue for some time to come. To be honest, though, no one really has any way of knowing or predicting volatility going forward, except in the most obtuse of ways, such as forecasting market performance over a given time period or pointing out exogenous risks, which can in turn drive the volatility environment. Since predicting volatility going forward is a total crap shoot to me, I feel it's best to play the ball "from where it lies" and to adapt when the environment changes, rather than trying to predict when and how much it's going to change. With this in mind, I plan to continue to keep doing what appears to be working (and, really, what has always worked, albeit with some periodic bumps in the road): shorting volatility products that have been the gift that kept giving in 2017, as much as being bullish broad market (short puts, short put verts, long call verts, long calls) was pretty much the gift that kept on giving in the same time period. At some point, this strategy will in all likelihood cease to work so well; until that time, it's just a plain time saver not to worry about checking the high implied volatility screener on a daily basis, since -- in all likelihood -- I'm not going to find anything there that meets my basic premium-selling criteria until things change their tune in substantial fashion from a volatility perspective. Previously, I religiously checked that screener on a daily basis (I probably still will; old habits die hard), but my guess is that the markets will continue to make that mechanical approach to premium selling in this market very short work, as that process has repetitively yielded very few worthwhile candidates for premium selling for weeks (if not months) on end in the stuff I like to trade -- broad market and sector exchange traded funds.* This week, I foresee only doing my weekly VXX long put vertical trade; the way it's looking, it'll be the Feb 9th** 27/30's or 27.5/30.5's given where VXX is at now. As previously pointed out, I'm hesitant to wade into UVXY here given its lowness to the deck and the likelihood it'll reverse split soon. The reverse split is not a "deal killer," but rather just a choice not to be in some funky, non-standard options contracts post-split. As always, I'll keep an eye out for any VXST/VIX >1.00 or VVIX >110 pops; it's possible that we could get one as investors opt for taking tax losses in their crap piles before the year's done and/or reposition anew in 2018 ... . * -- Naturally, I'm way more picky than some as to when sell premium. I expect certain things out of premium selling setups profit-wise relative to accompanying risk, and if those things aren't there, I'm just not going to play the market that way. The alternative approach is to take what the market gives you, regardless of implied volatility; this approach has its merits (cash flow, for one). After all, having no premium selling plays on in this market generates "nothing" cash flow; having something on generates something; and something is always greater than nothing. ** -- Feb 9th should open up on Thursday, if I'm not mistaken.
CBOE:VIXShort
by NaughtyPines
3
SP500 "Possible short in two days"There was a massive volume spike on Friday and we are due for another intermediate cycle low. Usually that means that a top will occur a couple days later. I think I will watch the RSI. There is a massive bearish divergence from many months ago. Once the RSI reaches the red line, I feel it would be safe to short this. This could be the correction many have been waiting for. I am also looking for price to reach the blue line 2691 range. I don't think we will reach 2700. That's just a guess. I think the big banks know that everyone is waiting for that mark. Tough call in such a bullish market but it can't go up forever without a correction here and there. GL
SP:SPXShort
by SalN
9
SP500 "2700 Anyone?"With the price breaking through that blue upper trend line on Thursday, I am considering that a crack in the armor. We still have a week and a half to go before the rate hike on the 13th and so it appears that we can reach the 2700 range. Especially with all that dip buying that happened today. Yep...the Central banks really want a rate hike so they are not going to allow the market to start correcting too early. Today was a perfectly good example of that. At 2700 it appears that we could get a 11.3% correction. All the way down to that very very long term black trend line. After that, I have said it all along, I think we push much much higher in the markets. Sentiment is neutral and with a 11% market correction, that will hurt sentiment even more. We have to get into a true bubble with sentiment reaching extremes. We are not there yet. Not even close. DOW 30,000 by maybe Mid 2018? Maybe even 40,000 by 2020. Now that is what I would call a bubble. And what will follow is going to be more catastrophic then we have ever experienced or thought possible in these modern times. So in the mean time, lets make as much money as we can and prepare for the bubble top. Hopefully by then Gold will be down at $600 or less. That way we can easily know where to put all our money. GL
SP:SPXShort
by SalN
3
SP500 "Daily Cycle in progress"SO I do not see this as the start of that correction that we have been talking about. Now that we have gotten into November AND now that it appears that the rate hike in December is at 100%,....and the Fed absolutely wants a rate hike....I am thinking that this monster will not be allowed to make its correction until the rate hike. The Fed wants the hike and wont let the market tank. If the market tanks early then they cant raise the rates. That being said, we are very late in this daily cycle. I see this as the end of the daily cycle in the next few days. For there to be a large market correction that we have been hearing about for months, it cant be in a far far right translated cycle. So that means that we go up soon and probably make new highs and a far left translated cycle. I heard one Elliot wave pro say he thinks it will top possible as high as 2660 with the red arrow path. We shall see how strong the bounce is up until the December 13th rate hike for that final high to be made. That's it.. Short and sweet. On a side note. Ugaz will be a buy once again soon. Probably under $9.30 and the start of a very strong 3rd wave. big gains ahead for that.
TVC:SPXLong
by SalN
5
SP 500 SPX SPY "October Market Correction??"SO I have been hearing a lot about the long awaited (and very past due) market correction that analysts have been anticipating since August. SO lets assume they are correct and that there will be a large market correction in October. What can the charts help predict. Well first of all, a true ICL needs to break the low of the last DCL. Since it appears we have made a double 3, 4 wave count, I believe that we would have to correct at least below that red zone. And with a decent correction, I just don't believe that we will break the very long term black uptrend line which was established at the 2009 bottom. So I measured the small wave count for what I believe is a wave 5 and as you can see, a full 100% move up of wave 1 would take wave 5 to 2552 range. But that would only account for an approximate 8% correction to that black trend line. (being that we are so so late for the ICL correction, I am expecting a swift correction to last no more than a couple weeks). But if we are to have that 10% correction that they have been talking about then that would mean that the SP500 would have to climb just a bit higher to closer to 2600. I am actually kind of hoping for that correction because that would be a great and easy buy the dip opportunity before we get into the euphoric bubble phase of this market rally. GL By the way, a full 10% correction would mean that the sp500 would have to reach 2602. And based on the current trajectory of price movement, that wouldn't happen until the very end of October or early November. Otherwise, an 8% correction could start next week as that is the estimate for price to reach that 2550 zone. Let us also not forget about the very large bearish divergence that exists currently on the RSI. IT also exist on the weekly RSI.
TVC:SPXShort
by SalN
5
THE WEEK AHEAD: COST, BBRY, TEVA, MATEarnings COST announces earnings on Thursday after market close. With a background implied volatility of 21%, it doesn't meet my basic earnings play sniff test, but naturally that can increase running into earnings, so it may be worth keeping an eye on. Preliminarily, the Oct 20th 158/170 short strangle currently pays 2.21 at the mid with break evens around the 1 standard deviation line for both sides. The defined risk version of that play, a 155/158/170/173 iron condor, brings in 1.00, with break evens wide of the expected on both sides. (I looked at using the Oct 13th expiry to take maximum advantage of any vol contraction post-earnings, but strikes where I would want to set up my tent were less than ideal). Non-Earnings Post-earnings, BBRY implied volatility remains fairly high at 46.25%, placing it in the upper one quarter of the where it's been over the past 52 weeks. Given the size of the underlying, the only play that makes sense from a nondirectional standpoint is a Nov 17th 11 short straddle, which is paying 1.24 at the mid with break evens at 9.75 and 12.25. The generic drug maker TEVA's implied is at 51.31%, which is around the middle of its range over the past 52. It's not quite where I'd like to see it, and the Nov 17th 15/20 short strangle is only paying .80 at the mid with break evens short of the 1 standard deviation line In contrast, the Nov 17th 17.5 short straddle is paying 2.46 with break evens wide of the expected on both sides, but the comparable iron fly -- a Nov 17th 12.5/17.5/17.5/22.5 only pays 2.20, short of the one-quarter of the width of the longs I like to get out of those. For those looking to strategically acquire shares or to just sell directional premium, the 30 delta Nov 10th 16 short put is paying .52 at the mid with a break even of 15.48. Toy maker MAT has the right rank/implied metrics here, but with earnings a mere 17 days out, the preference is wait to put on a play shortly before earnings to take maximum advantage of vol contraction. Exchange-Traded Funds These are my bread and butter trades, but there's little bread and no butter here. The highest implied volatility exchange traded fund is EWZ at 31.43%, but it's in the lower one-fourth of where it's been over the past year. GDXJ follows with 29.93%; XOP, 25.96%; GDX, 23.25%; and OIH, 24.21%, all at the bottom end of their ranges and, in any event, below 35% implied generally. VIX et al. VIX finished Friday at sub-10 levels and its "little buddies" (VXX, UVXY, SVXY) continue to be cannibalized by contango. Sit on your hands for any VIX "Term Structure" trade (the first /VX future trading at >16 is in April) and wait for a VXST/VIX ratio pop to greater than 1.15 (Friday finish: 83.6) to put on plays in VXX, UVXY, and/or SVXY.
NASDAQ:COST
by NaughtyPines
THE WEEK AHEAD: WATCHING VIX AND ITS "LITTLE BUDDIES"With VIX settling at around 10 on Friday, there's little that catches my attention here in terms of pure premium selling. Currently, no individual underlying is up to my high implied volatility rank/high implied volatility standards and neither is any exchange-traded fund. Naturally, I'm beginning to sound like a broken record here. I mean, how many different ways can I describe this protracted low volatility market with descriptors such as the current market's being a "wasteland for premium selling," there being a "paucity of premium-selling plays," or that there is a lack of "sexiness" or "juice" in the market as far as selling premium is concerned. My options are either: (a) torture myself by putting on low probability of profit, low credit received at the door premium selling plays; (b) pursue low volatility strategies such as calendars and diagonals; or (c) wait with mounds of cash (I exaggerate with the "mounds" part) on the sidelines until volatility increases. To me, option (a) makes little sense here, since I'd be opting for low quality stuff just to have plays on or to "increase occurrences." It may just be me, but I like to have numerous quality occurrences on, not numerous crappy ones, and I guarantee you'll be in numerous low quality premium selling plays if you keep putting them on here and the market keeps doing what it's been doing (going up ... incessantly). This is particularly so if you continue to go nondirectional (i.e., short strangle/iron condor/iron fly) in this low volatility environment and in skewed instruments like SPY, IWM, QQQ, and the DIAs, where having call side risk on has just been a terribly "unfriendly" trade for several months now. That being said, things can change in an instant with an exogenous risk event, which we've been unexpectedly met with on several occasions during the past couple of months -- only to have the dip buyers promptly wade back in, lending credence to the fiction that we're in an endless bull market handicapped by an inability to undertake any meaningful correction such that the stories regarding this being a "bubbly" market valuation-wise entirely evaporate. I've done a few option (b) trades (SPY, IWM, GLD calendars), both small and with plenty of time to work out. But for them, I'd be almost entirely flat here. To a certain extent, I regard them as largely "engagement" trades with limited likelihood of huge gains, but also limited likelihood of huge pain, since they were put on for debits, my risk is defined, and I pretty much know how much is on the line should they not work out. In other words, they're just there to keep me from going entirely bat crazy bonkers while I wait for sufficient volatility to take advantage of the market with my go-to strategies -- short strangles, iron condors, and iron flies. The calendars beat a poke in the eye with a sharp stick, but not by much. Barring productive market behavior in SPY et al., I'm basically watching VIX here, along with its "little buddies" -- VXX, UVXY, and SVXY -- for an opportunity to add something there in the short-term or farther out in time. (See Posts below).
TVC:VIX
by NaughtyPines
6
OPTIONS TIP: WHEN/HOW TO MECHANICALLY SHORT VOLATILITYThere are two types of VIX or VIX product (i.e., VXX, UVXY, and SVXY) trades that I like: (a) "Term Structure" and (b) "Contango Drift" trades. "Term Structure" Trades "Term Structure" trades are only done in VIX, since only VIX has an underlying future (/VX) and a "term structure," with /VX futures prices generally priced at increasingly higher prices as you go further out in time. While these trades do benefit from contango, they are set up using the /VX futures term structure (not VIX spot price). In that sense, the price of VIX is somewhat irrelevant to these trades, although you'll naturally find that if spot is elevated, the futures price in the expiry in which you want to set up your trade is, too. My entries are straightforward: (a) find the /VX front month futures price >16 and in an expiry that is <90 days out; (b) sell a short call vertical spread with the short call aspect at/near the /VX futures price in the expiry that corresponds to that of the /VX future (i.e., if the /VX future >16 is in Dec, sell the VIX short call vert in the Dec expiry with the VIX short call strike at 16 and the long call out from that strike). You can naturally go lower (i.e., the 15 strike), but I view the 16 level as a fairly long term average level that I'm comfortable working with. As far as the width of the spread is concerned, that will be subjective. The wider you go, the more the max loss potential -- keep your risk consistent with your per trade risk tolerance. To give you some sense as to what to expect out of these: look for .70-.80/contract on a three-wide and look to take profit at 50% max. "Contango Drift" Trades The vast majority of the time, VIX is in contango. What does this mean? Without going into too much detail as to "why this is so" and at the risk of oversimplifying things, it basically means that products like VXX and UVXY decline over time in the absence of backwardation. Backwardation -- where near-term futures prices or spot is actually higher than longer-dated futures -- doesn't occur all that often, so the general, overall, long-term drift of these instruments is toward zero, with occasional reverse splits being necessary to prevent them from ceasing to exist. That being said, these instruments experience spikes just as VIX does; it's just that -- on average, over time -- they decline in value, and "Contango Drift" trades look to benefit from that fairly inevitable decline. Entries here are also straightforward, but some patience is required to wait for the right metrics to occur -- a VXST/VIX ratio of greater than 1.0. The higher the ratio, the better. When that ratio is greater than 1.0: sell a short call vert in either VXX or UVXY (a) in a 45 days until expiry or greater; (b) with the short call aspect at the first in-the-money strike; and (c) the long call aspect as wide as your per trade risk tolerance permits. With SVXY, an inverse, do the opposite: sell a short put vert (a) in a 45 days until expiry or greater; (b) with the short put aspect at the first in-the-money strike; and (c) the long put aspect as wide as your per trade tolerance permits. With these, I attempt to get 1/3rd the width of the spread in credit, so for a three wide, you should be seeking a 1.00 in credit; a four-wide, 1.25, etc. Liquidity in these instruments -- particularly in UVXY and SVXY -- can sometimes be "pesky" with wide bid/asks, so you frequently need to shoot for a mid price fill and then walk your fill price in incrementally to get filled. As with the "Term Structure" trades, I shoot for 50% of credit received for these. 1 -- Assuming that VIX is in contango. 2 -- SVXY, an inverse, increases over time. 3 -- SVXY, an inverse, "regular" splits. 4 -- I personally like something north of 1.15, but it's hard to hit these spot on.
TVC:VIXEducation
by NaughtyPines
8
THE WEEK AHEAD: RRC, GDX, GDXJ, AND XLIIn spite of various media reports that "volatility is back," anyone who plays the premium selling game knows that it isn't in significant measure. Nevertheless, there is some uptick in volatility as compared to the post-election to March volatility lull, which was a slog to get through for premium sellers who look to capitalize on a high implied volatility environment. That being said, the minor uptick isn't providing candidates for picky premium sellers like myself, who look for certain implied volatility metrics to get into plays. High Implied Volatility Rank/High Implied Volatility Underlyings Currently, there is only one underlying that meets my >70/50 rank/implied volatility metrics, and it's RRC with a rank of 98 and a background of 55. It's a land-based oil and gas exploration and development company with an abysmal balance sheet, and it's less than an ideal options play for the impatient, since it only has monthlies to work with. Possible plays would be an Oct 20th 15 short put at the ~26 delta (neutral to bullish), which is currently paying .50 at the mid with a break even of 14.50 or a nondirectional: the Oct 20th 16 short straddle (neutral to slightly bearish) is paying 2.30 at the mid with break evens at 13.70 and 18.30 (I would skew bearish, since we've seen a bit of a Harvey bump in oil prices that is likely to recede in fairly short order) or a defined risk Oct 20th 13/16/16/19 iron fly (neutral to slightly bearish) with break evens at 14.22/17.78, a credit of 1.78, and a buying power effect of 1.22. Low Implied Volatility Rank/Low Implied Volatility Currently, XLI, GDXJ, and GDX all have ranks at the very low end of their ranges. The gold plays are really no surprise there, with gold having ripped up to 52-week highs on risk off sentiment and overall Greenback weakness. Ordinarily, these would basically beg for a low volatility strategy such as a 40 delta/same strike* calendar, but these will not be worthwhile unless you go multiple contracts due to the size of the underlying. Consequently, working something like a 90/30 Poor Man's Covered Put** might be more productive if you've got an assumption that risk on and/or Greenback strength will return at some point and gold will weaken. For example, the bearish assumption Oct 20th 24 short put/March 16th 33 long put Poor Man's Covered Put costs a 7.66 debit/contract to put on. XLI -- which I honestly have not played much, evokes similar setups ... . VIX/VIX Derivatives The first /VX future at >16 (north of where I like to setup up my VIX tent, generally) is currently in January (128 days until expiry). That contact was trading at 16.12 as of Friday close, but it's still a little too far out in time for me to set up a play, since I generally like these with 90 days to go or less. The VIX Jan 17th 16/19 short call vertical with a fairly generous break even at 17.75, is paying .80 at the mid, which is generally what you get out of these VIX term structure plays (between .65 and .85/contract). That being said, the Feb expiry is amenable to laddering out, with the 17/20 paying .77, so I may go ahead and put on a trade if I see little else going on next week, particularly since it's a rollover week, where there might be some temporary uptick in futures contract pricing as the term structure adjusts. With the derivatives (VXX, UVXY, SVXY), I'm looking for a short VXX/short UVXY entry or an SVXY long entry if the VXST/VIX ratio pops to 1.15 or so. With VXX/UVXY, this will generally mean a 45 days 'til expiration short call vert with the short call slightly in-the-money and the long aspect out-of-the-money such that the spread yields one-third the width of the strikes. With SVXY (an inverse), it'll mean the opposite -- a short put vertical with similar characteristics. * -- Back month long at the 40 delta strike; front month at the same strike. ** -- Back month long at the 90 delta; front month at the 30.
CBOE_DLY:VIX9D
by NaughtyPines
OPENING: SVXY SEPT 15TH 79/81 SHORT PUT VERT... for a 1.03 credit. I put this on "on the fly" on Friday. Basically, I'm looking to get a credit equal to max loss with these, so I put this in-the-money short put vertical on for a 1.03 credit with a buying power effect of .97 (risk one to make one) with the notion that contango* will erode the position running into expiry ... . Notes: Will look to "money, take, run" at 50% max. Currently, you can still get into a similar play; it'll just be lower down the totem pole: the Sept 15th 74/76 is paying 1.05 at the mid with a buying power effect of .95. The underlying is fairly illiquid, so don't settle for anything less than the mid price ... . * -- In the case of SVXY, an inverse, contango erosion causes the underlying to increase in value.
CBOE:SVXYLong
by NaughtyPines
3
SP500 SPY "Looking for the correction to start last week of JulyMy timing is slightly off but with the recent breakout, it appears that my wave count is on the money. We are in wave 5 of a larger 1 of this bull markets final Wave 5. I hope that did not confuse you. So I do not think this will measure the same as wave 3 which would take it to around 2510 ish. And I am looking for it to be a little bigger than wave 1, which would take this to 2483ish. So maybe we touch 2500 before starting a steep larger wave 2 correction. I am looking at a little over a 9% market correction down to the long term trend line. It should end sometime in August. Then we should get a nice long wave 3 rally.
TVC:SPX
by SalN
6