After what has seemed like a never ending sequence of up days the market has come down with a bang on Friday only for it to make it all back over the past two days. Volatility products continue to struggle to contain any move higher as the market rally continues. Taking UVXY for example, it has lost over 50% of its value in the last month and a bit, as the roll cost are quite high as the futures are in contango, meaning that near term there is little fear , with expectation for more volatility later on in the year.
In Europe the DAX has taken a big hit the past few days, after hitting highs at 12400. Since then it has come off over 5% trading to a low of 11700 before bouncing back above 12000 two days later. Such a move isn't surprising given that QE still underpins the market. I have maintained my short for the past 3 months rolling up and extending duration, waiting for the inevitable correction. I initially had a 10500/10350 put spread in Feb which I rolled to 10550/10400, and now today I rolled my May Options over to June with a 11000/10850 put spread whilst selling a put at 9000 to cover the roll cost. With IV relatively low, playing the debit spread worked out to be the better play in my opinion.
I continue to be long Volatility as well, and this is the biggest drag on my portfolio as drag has pushed this contract down further, as the effect of the roll is embedded in the ETF. UVXY is trading around 11.50 right now however it was trading at 37 earlier in the year. I'm hoping for at least a 50% retracement in this ETF.
I'm currently looking into shorting Oil if strength continues as it looks like there is not much more room to go and as for Equities, I don't see no reason why the buy the dip mentality will change so expecting more upside after every pullback.
In Europe the DAX has taken a big hit the past few days, after hitting highs at 12400. Since then it has come off over 5% trading to a low of 11700 before bouncing back above 12000 two days later. Such a move isn't surprising given that QE still underpins the market. I have maintained my short for the past 3 months rolling up and extending duration, waiting for the inevitable correction. I initially had a 10500/10350 put spread in Feb which I rolled to 10550/10400, and now today I rolled my May Options over to June with a 11000/10850 put spread whilst selling a put at 9000 to cover the roll cost. With IV relatively low, playing the debit spread worked out to be the better play in my opinion.
I continue to be long Volatility as well, and this is the biggest drag on my portfolio as drag has pushed this contract down further, as the effect of the roll is embedded in the ETF. UVXY is trading around 11.50 right now however it was trading at 37 earlier in the year. I'm hoping for at least a 50% retracement in this ETF.
I'm currently looking into shorting Oil if strength continues as it looks like there is not much more room to go and as for Equities, I don't see no reason why the buy the dip mentality will change so expecting more upside after every pullback.
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