UVXY (short) v SPY v SDS (short)
- Thread starter Saltynuts
- Start date
Why is that zghorner? And all three of my tests were on things that were long the market. So if I wanted to long the market, what would you say I should put that is much more effective than either of the two shorts I tested?
Thanks!!!
Is relevant. Don't take your eyes off the ball.
Take whatever your average entry on your GME short is and say GME goes to 1000+. Not saying it will but it could. You hold. GME eventually goes 1 cent below your average short entry price and you cover. You made money. But what was your drawdown on your short?
Max drawdown on a long is 100% and you have to be absolutely dead wrong. Stonks only go up.
I think it is hard to argue against your conclusion in the OP. Buy and hold SPY really is guaranteed victory...and with interest rates so low it seems like a great place to park cash for the long term.
as for shorting vol...that has to be about the most unappealing strategy to me. the literal definition of picking up pennies in front of a steamroller where you look like a genius 99% of the time only to blow up when it gaps like crazy.
UVXY went over 12x in less than a month in 2020...
Would need some serious discipline in cutting losing positions...Imagine waking up and opening your trading platform to see that you are down 200%+ overnight on a short UVXY position with no end in sight. Trying to tell yourself "it'll come back down soon" can easily lead to a margin call then liquidated position forcing you into a cardboard palace under a highway overpass on southside.
Puts would at least put a cap on losses at 100%...however i cannot say that long puts are a viable strategy either. a quick glance at the options chain looking at historical value of puts of various dates having high volume strikes show a loss most of the time (typical time decay and IV crush).
just brainstorming here but maybe a long call short common strategy would work well...would reduce your overall return but could sleep better at night having insurance. sucks that VIX and UVXY have sort of a reverse skew where call options are more expensive than puts. Makes sense because they essentially inverse the S&P...just sucks.
Yes I agree shorting entails different (greater) risks than going long. Which pushes even more in favor, among my three tests, of just holding SPY long since it beats the short strategies anyways.
One thing I *really* like about the short strategies, however, is that as the market goes up, your positions go down, so you NEVER need to sell, and incur a tax hit, if you want to diversify later on. As the markets go up, your short position becomes smaller smaller, and you can always short more to maintain the same short position if you want, but you can instead diversify tax free if you want. In the going long 100% SPY scenario, you have to sell to diversify, incurring a tax hit.
Yep, we are thinking around the exact same lines I think zghorner. Shorting UVXY and buying UVXY calls way out of the money I looked at before, but those calls are pretty pricey given the circumstances (how much it can pop so quickly).
fwiw I rebought UVXY on the close Friday, in case the VIX spikes again next week. Risky but big upside potential.
It's close to 52week low 3.9 and spiked to 6.2 last week, VIX etns I buy the dip sell the rip, only keep size on for a few days when swingtrading due to contango.
It's close to 52week low 3.9 and spiked to 6.2 last week, VIX etns I buy the dip sell the rip, only keep size on for a few days when swingtrading due to contango.
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I've had both wins and stops lately. I don't know if this new one will win, will find out Monday. Tried buying Thursday but took stops on the way down Friday : o
Best trade in my life was buying TVIX 56 selling 940, holding a few shares many weeks.
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