Selling puts on SVXY

R

rocky_raccoon

Hi Y'all,

Does anyone sell puts on SVXY? If so, what entry/exit rules do you use?

I've been thinking about it for a while and it seems to be a decent strategy given an (almost) persistent contango in VIX futures. However, I am not sure when to enter such a trade and at what strike.

One option is to enter 3-4 weeks until expiration and 10% below then current price. If SVXY drops as it may (recent drop from 100 to 75 took 4 days) then get assigned and start selling calls. The chances of bounce back have been pretty good so far.

Another option is to wait until the actual drop (who know for how long) and only then start selling puts. That would give me a good head start if the quick bounce follows or at least reduce the risk to some extent.

What do y'all think?

RR
 
Quote from rocky_raccoon:

Hi Y'all,

Does anyone sell puts on SVXY? If so, what entry/exit rules do you use?

I've been thinking about it for a while and it seems to be a decent strategy given an (almost) persistent contango in VIX futures. However, I am not sure when to enter such a trade and at what strike.

One option is to enter 3-4 weeks until expiration and 10% below then current price. If SVXY drops as it may (recent drop from 100 to 75 took 4 days) then get assigned and start selling calls. The chances of bounce back have been pretty good so far.

Another option is to wait until the actual drop (who know for how long) and only then start selling puts. That would give me a good head start if the quick bounce follows or at least reduce the risk to some extent.

What do y'all think?

RR
More...

I think this thing could trade down to the single digits. Which means you have to sell so little size that I don't see how it how it could be worth it. Man this bull market is getting long in the tooth when I read posts like this. The time to sell puts is right AFTER the crash, not 4 years into the bounce.
 
If this etn is the inverse of the short term VIX index (which is described by the VXX etn) then why is this etn not making money over the last 4 months while the VXY has lost 20% of it's value?
 
Quote from Maverick74:

I think this thing could trade down to the single digits. Which means you have to sell so little size that I don't see how it how it could be worth it. Man this bull market is getting long in the tooth when I read posts like this. The time to sell puts is right AFTER the crash, not 4 years into the bounce.
More...

Can you make a case for SVXY to go to single digits?

Last time we had a decent sell off was in Jul-Sep of 2011. S&P went down from 1350 to 1110 (17% drop). SVXY was not around at that time but its close cousin XIV was. It went down from 18 to 5 (72%).

If we assume similar magnitudes in the upcoming crush (I've been waiting for it for more than a year and cannot hold my breath any longer), SVXY should drop to 25 (same 72%). The question is 'when'.

I generally agree that selling puts on SVXY makes more sense after a good sell off in S&P.

BTW, how about selling SVXY put and buying longer term OOM (or DOOM) put on SPY? If the market crashes hard, SVXY loss should be offset by SPY put gain. If it does not crash SPY put would still have some value when SVXY put expires and that would allow to sell another SVXY put.
 
Quote from newwurldmn:

If this etn is the inverse of the short term VIX index (which is described by the VXX etn) then why is this etn not making money over the last 4 months while the VXY has lost 20% of it's value?
More...

What is VXY? It's not a valid symbol. VXX has been almost flat in the last 4 months as well.

Since Feb: VXX went from 23 to 18.5
SVXY from 86 to 90

So, yes short VXX was better than long SVXY but both would make money.
 
since 4/18 vxx is down .1497
since 4/18 svxy is up .1699
signifigant advantage to svxy

therefore opposite conclusion.
 
selling puts sounds foolhardy.,when you don't understand volatility or the math in this instrument. you are not a warren buffett.
 
Quote from rocky_raccoon:

What is VXY? It's not a valid symbol. VXX has been almost flat in the last 4 months as well.

Since Feb: VXX went from 23 to 18.5
SVXY from 86 to 90

So, yes short VXX was better than long SVXY but both would make money.
More...

Typo - meant VXX.

20% decline vs 4% increase....

Clearly this is not an ETN you want to be long delta in even if it fits your view that contango will persist.
 
Quote from newwurldmn:

Typo - meant VXX.

20% decline vs 4% increase....

Clearly this is not an ETN you want to be long delta in even if it fits your view that contango will persist.
More...

Look at a longer term. Say 1 year. VXX is down 75%, SVXY is up 150%.
 
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