@ProfitHarvest A lot of ideas (incl yours) are pointing to a spike immediately, dropping back down for a couple wks, and then a major bottom (mkt topping) mid-Feb. Do you have an intermediate target (possibly today/tmrw-ish) for a spike, assuming we don't plow through the wedge?
WizdomSeekerr
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Aaaand it went back down. UVXY always goes down let's be real to ourselves
Here is my post to the previous elegant chart by the same author.
Note that my $9 strike cash secured puts are $1.34 bid $1.39 ask. these are eroding nicely as time decay increases as expiration approaches.
Here's that post and how I always do this...
There is Biden $1.9 trillion in stimulus coming.Yellen to discuss it today. Barring a quicker unforseen Fed Rate hike, UVXY will have the usual chart dynamics. I trade this name. I sold the $9 strike puts for March on the dip to the lower end of the trading range and averaged $1.65. If the common is above $7.35 at MArch expiration I have a profit. If the unforseen spike occurs, (Volmageddon trapping the shorts February 2018, Covid MArch 2020, Iranian General etc) the common will continue to erode. UVXY is a wasting asset. Newbies to this name be aware.
The chart is always downward. Again the spike was $12 to $130 with Covid March drop in SPY and leveling off for one week at a twice average true range drop (see the weekly chart). Then SPY fell off the cliff and the UVXY leverage worked. Absent a black swan event this trends unceasingly downward. In the March 2020 case the one week leveling off gave adequate time for long put buying and credit call verticals.
In the Iranian General event I was able to buy in puts. The call position to follow the next Monday never materialized as the Iranains shot a few scuds into the sand in a remote part of an airbase housing American troops and declared victory. Volatility declined.
A rise in UVXY is always event driven. Absent drivers I sell puts that are at nearly one standard deviation down on any drop in vollatility and buy these in for a minimum of $20 per contract net gain on any range bound non twice ATR bounce. I sold these twice in the last 7 weeks and bought them back all based on the high end buying in of the contracts and the low end range bound sale of the puts on an implied volatility spike in the put premium collected in my cash secured put sale.
In the last 60 days of any option sees the fastest time decay of an option. this is where the MArch UVXY $9 puts erode the fastest. If UVXY stays above $9 I once again will buy these back cheaply at about 21 days to expiration and do it all again with the same amount of money at risk. The caution is never to exceed 90 days and always watch Proshares for the dreaded reverse split that can leave the put seller with fractional shares that trade at a very large spread - not good. Also if the puts are sold too far out then the natural erosion of value bsent a volatility driven event forces downward the common. In general volatility levels are slightly elevated now, but absent an event the common will erode - as it is designed to do.If you give me a known direction I will figure out how to game it.
Most of the problem that charts try to divine is direction. this has a known direction with a few corrections. I get enough time to buy the calls when needed."
WizdomSeekerr
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@Spotshooter1983, There has never been a correction in UVXY that's the thing, it's still going downwards. It got R/S so much that it's original price is now priced in the 100's of millions. Talk about "Fraud"