SVXY

[stockoptionstrader]

Hi all,

After the recent volatility spike up, do you recommend buying SVXY long call leaps or is it not a good strategy?

TIA

 

[stepandfetchit]

IMHO: We recently had the sharpest spike in volatility in history (change/time)! This change exceeded 80% change, resulting in XIV exceeding their termination clause. Just a bit more volatility could have hit the 100% change, which would cause SVXY to go negative! What is the likelihood of this occurring during the time you have long capital allocated?
I think one needs to consider the possibility of the "termination". Before this month, this possibility, did not seem likely!
Having said that, I am long SVXY, but am less optimistic about longevity of the instrument.
(The premiums of the options seems high to me, so I don't trade them.)

 

[JSOP]

Hi all,

After the recent volatility spike up, do you recommend buying SVXY long call leaps or is it not a good strategy?

TIA

If the option is cheap AND provided you hedge. Yeah why not? Call leaps is just like buying SVXY without actually owning SVXY.

 

[stepandfetchit]

If the option is cheap AND provided you hedge. Yeah why not? Call leaps is just like buying SVXY without actually owning SVXY.

Hm! They (longer dated call options) do seem less inflated than I recall prior to the Feb spike! May be a good way to leverage at-risk capital fairly efficiently. Thnx for the post.

 

[mt2rules]

Hm! They (longer dated call options) do seem less inflated than I recall prior to the Feb spike! May be a good way to leverage at-risk capital fairly efficiently. Thnx for the post.

They have just announced that the leverage is lowering from -1x to -.5x. The IV has halved in the options as a result. Be careful about using expectations from the past to trade this now.
https://www.bloomberg.com/news/arti...hes-leverage-on-surviving-volatility-products

 

[SoesWasBetter]

market SCREWED options longs big time.

Another black swan

 

[stepandfetchit]

They have just announced that the leverage is lowering from -1x to -.5x. The IV has halved in the options as a result. Be careful about using expectations from the past to trade this now.
https://www.bloomberg.com/news/arti...hes-leverage-on-surviving-volatility-products

WOW! Did not know. Thnx! That should drop the interest considerably in the near term (perhaps some exits as long prospects may be better suited elsewhere). Need to digest this.

 

[stockoptionstrader]

Well I bought already some SVXY long calls far out of the money. it's more like a gamble.

But I was also thinking if you can hold SVXY in stock for like 5-10 years (it has to recover) unless they close SVXY. Or maybe buying SVXY after a huge spike like we had and with a good stoploss, Any thoughts?

 

[SoesWasBetter]

we all hodl SVXY for 10 years.

 

[stepandfetchit]

After a short break to change my undergarments after the shocking post by mt2rules... My initial fear of the longer-term prospects for SVXY have diminished considerably!