tvix/uvxy-call hedge ratio

S

stevenpaul

I was considering selling calls on uvxy to hedge tvix, which doesn't have options. When tvix was at about 6, uvxy was at 27. If long 2000 shares tvix at 6, how many calls of uvxy at strike 27 could one sell for a decent hedge in case it never comes back?

Thank you all.
 
guys, selling calls ie: taking in some small amount of premium, is never going to hedge a long position in the underlying (or similar) if "it never comes back". You are taking in a fraction of what you will be losing. If you are not confident in your underlying long (uvxy) you should sell the position.
 
sss12 said:
guys, selling calls ie: taking in some small amount of premium, is never going to hedge a long position in the underlying (or similar) if "it never comes back". You are taking in a fraction of what you will be losing. If you are not confident in your underlying long (uvxy) you should sell the position.
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That's an excellent answer.
 
Well, selling premium going out far enough raises about the same as what is recoverable by liquidating the long underlying (close enough anyway). Then, the market could come back. But then it might not, hence the hedge notion. Who thinks Tvix and its ilk are doomed due to contango, etc.? I fell asleep a few weeks and it's down ~80% Is that it? Is it done, or just hibernating?
 
stevenpaul said:
Well, selling premium going out far enough raises about the same as what is recoverable by liquidating the long underlying (close enough anyway). Then, the market could come back. But then it might not, hence the hedge notion. Who thinks Tvix and its ilk are doomed due to contango, etc.? I fell asleep a few weeks and it's down ~80% Is that it? Is it done, or just hibernating?
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You are leaving out the part where it was up 80% in two weeks. Easy come...easy go. Nothing new here.
 
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