FRIDAY 01/06

[novie08]

Thanks for that Mist. I hold a core of GORO and trade it occasionally as well.

[novie08]

Big mistake: Usually do best with swing trades, would have done great to stay short UVXY from Tues. Live and learn. May not have this opp again if trade is broken as Mist suggests. Another 52-wk. low at about 11:30....

[theMist]

VXX trying to put in a short term bottom.  Watching 5 min chart.   Solid green Bottoming Hammer Candlestick and has confirmation and tail is outside lower BB.  So far candle is holding up. Could be a small bounce and drop back down to retest new lows or could be the move that sends VXX back to fill the upside Breakaway GAP.  If its a small bounce and you get stopped out, that's ok.  Would look to add again as it moves lower.  So, if starting to go long VXX, I would keep it real small and put my stop just under today's low $21.63.   Good time to start nibbling and accumulating VXX long position over next trading day or two  IMO.  But you know it will be a gut wrenching, emotional roller coaster ride at start -- UNTIL you see them start to fly back up to the upside.  When it moves in your favor and you see that the markets are starting to sell hard, then be a little more aggressive and add more.  But ALWAYS average in your positions and ALWAYS leave gun powder.  My bias is now switching back to going long volatility (VXX, UVXY) for short term.   Be careful when long TVIX because it is an ETN and you remember that share suspension BS back in 2012.   Remember - keep it real small for now.   You will know and see clearly when volatility starts to spike hard.  IMO   SCAMs could still break one more time to new all time lows so keep it real small.

If short the SCAMs for long term, good time to at least consider hedging (talk to Walnut).  IMO

Here is chart:

[theMist]

Wish DOW would hit 20k already and get it over with

[novie08]

Another terrorist attack but gold is down/Dow is up. Death toll at least 5 dead at Ft. Lauderdale airport...still cannot prevent in spite of TSA, etc.
NASDAQ did hit alltime high and is 19,999.63 close enough?

[theMist]

Nibbling at UVXY long position.  Keeping it real small

[theMist]

I'm seeing a nice green candle stick on daily chart in the VIX Scams in next few trading days.  Starting to come into focus but difficult to see through the Mist.   lol

Holding small UVXY long position (2500 shares) over weekend.   Not going to sell until UPSIDE GAP fill.  Looking to add more.

[walnut]

Finally got back. Snowy roads. Looking forward to reading what you guys think is going to be happening.

[birthmark]

Hey Mist--

I also nibbled some UVXY at 6.41 (1000 shares)

Will hold for a few days and add as we rise.

GL

[novie08]

Ok, Mist and Birth along with Huh probably are enough to convince me to go long on Mon. Morning.
Everyone have a good week-end and GL...we're looking at several inches of snow and temps in the teens and single digits until Tues! Brrr! This is unusual for us.

[theMist]

I posted on VXX Minding the Gaps thread.   Take a look when you get a chance.

ttyl

[theMist]

Birth,

Thx for the vote of confidence but please keep it real small.   Not sure how much dry powder you have left.   It's very difficult to time the pops in the VIX SCAMs (especially with contango at 13%).   Like Huh said "not recommended".

Keep in mind VXX (with the rest of the SCAMs) over next few days can still trade sideways to down and hit $20-$21 range.   That's why if your playing long its best to average in real, real, real small and spreadout over days.

I feel far more confident in making the call to AGGRESSIVELY go SHORT VXX, UVXY, TVIX, when I see that volatility has peaked and they're ready to collapse back down and in the long run they're headed to new lows again anyway.   Just a matter of holding longer just in case you don't nail the spike perfectly.   Like Walnut would say - "its the easier money"

On a side note - years ago before my surgery, I remember as soon as the VIX SCAMs would start to fill the GAP, it was PRACTICALLY GUARANTEED that they were going to fill the GAP right then at that moment.  Now, I've seen them start to fill the GAP (price action starts to move inside the GAP) and then it reverses and the GAP acts like resistance and I'm like WTF?!?!  lol    So even then you have to be careful being ALL IN on the trade.

When the market starts to sell hard and SCAMs start to spike, you will know it and feel it.

And BTW - the longer it takes to fill the upside GAP, usually the larger the spike in volatility.

Hope this helps

[walnut]

I have been looking again, *AFTER gap fills* - buying some $1 out of the money calls to hedge, and INCREASING the size of my short position. Looking at the historical info, you would have made larger gains doing that several times. About 17 days to expiry calls are the sweet spot. This hedge will make it safer to stay short longer and get more of those last $$ that you might not have gotten. The higher VXX were to rise beyond expectations, the more the delta insurance kicks in. The more VXX drops, the lower the options delta drops, allowing your trade to profit more as it goes.

The risk is that VXX continues on up higher than you expected, and then continues to be volatile on into your option expiry date, you will need to roll over. Yes you will be hedged but you are going to run into some costs to continue and it is difficult to predict how much it is going to cost you. If you try to use longer calls you are just going to be losing on delta as VXX drops and there is no point.

But the risk of VXX rising higher than expected is always the problem anyway and all things being equal the calls hedge that risk mostly. The question is how much larger will it permit you to trade with similar risk exposure?

If things go normally VXX turning back down fairly soon and continued high contango, Your increased gains will exceed your increased costs, as the delta of the call option goes down while the VXX goes down, will get better and better.

[theMist]

Awesome stuff Walnut.   Please post your covered short VXX moves going forward -- if you decide to hedge.   You are far more knowledgeable than I am with Options trading.

[walnut]

Yeah maybe we will see this week

[theMist]

The last time I bought an option it was right before Apple earnings release (after the bell).  I knew Apple stock price was going up the next day so I bought some slightly out of the money calls (weeklys).  The stock price was so volatile in AH and premarket the next morning and finally opened up higher.  So I got the move I was expecting in the stock and went to look at the options only to find both calls and puts were in the red. I was so upset as wanted to throw my computer out the window.   Lol.  Obviously, I had paid a high premium and I'm pretty sure Apple had a high beta

It was at that time that I learned the smart money are the options writers.  I never realy dabbled in options again after that.  I just stick with what I know best - trading volatility. 

[walnut]

I normally prefer selling them too, almost never buy options.

Anyway, I have definitely not decided on this yet.

[birthmark]

Many thanks Mist for the warning and concern in your post. Much appreciated.
I do indeed have dry powder left and am not going all in. I'm not trying to hit a home run either -- just want to catch part of that wave.
Let's see what this week brings.
Great having you back and posting.

THanks again.