I wish I had a crystall ball. I am trying to create a position that would benefit from more than one possible outcome. That's all. Buying put is a lottery ticket and I don't play lotteries.
Selling puts on SVXY
- Thread starter rocky_raccoon
- Start date
I wish I had a crystall ball. I am trying to create a position that would benefit from more than one possible outcome. That's all. Buying put is a lottery ticket and I don't play lotteries.
To trade svxy, using bull OTM puts spread is much better than selling naked puts. Svxy has a good possibility to drop to 0. I'm not kidding. This is not a just a theoretical thing.
Can you come up with a realistic scenario under which SVXY drops to zero?
What VIX futures would look like in that case and what would happen to ZIV, XIV, VXX, and VXZ?
If the institution that underwrites the SVXY goes bankrupt.
I look forward to hearing how you top ticked puts after the SVXY has rallied 10 handles
.Quote from newwurldmn:
If the institution that underwrites the SVXY goes bankrupt.
I look forward to hearing how you top ticked puts after the SVXY has rallied 10 handles
The institution is call ProShares. If they go under, SVXY won't be the only victim. Besides, it's ETF and its assets should be passed to the shareholders if the underwriter goe out of business.
That is one scenario but it is not unique for SVXY and very unlikely. Most people who say that it may go down to zero think of some sort of a broad market crash circa 1987 and I'd like see their logic.
BTW, if I take a position I will post a screen shot with a time stamp here
If someone says that an instrument may go down to zero they should explain their thinking, shoudn't they?
Quote from rocky_raccoon:
The institution is call ProShares. If they go under, SVXY won't be the only victim. Besides, it's ETF and its assets should be passed to the shareholders if the underwriter goe out of business.
That is one scenario but it is not unique for SVXY and very unlikely. Most people who say that it may go down to zero think of some sort of a broad market crash circa 1987 and I'd like see their logic.
BTW, if I take a position I will post a screen shot with a time stamp here
This is all true. It's not an ETN, so bankruptcy risk is a lot lower. In any case, I wouldn't be worried about it going to zero. I would be worried about it not performing as advertised.