A holiday shorten trading session today July 3rd. The market opened lower and I wanted to buy the dip. We have been mostly gaping up lately, so I wanted to pounce on this drop. I was hoping to buy 1000 shares of SVXY. Volatility has been on the decline and tends to revert to its mean. I missed my limit price of $78 that I saw in before hours trading. Instead of chasing, I decided to go try shorting UVXY. The double inverse of the VIX futures. Unfortunately, E*Trade cant borrow any shares to trade, but they do sell options on UVXY. So I saw that the weekly $72 calls was selling at $2.05 with 2 days to go. That means UVXY would have to move 7.8% in 2 days before I start to lose money or go above $74. With the market closed for July 4th, we really only have 1 day left, plus the half day today. That is a risk I was willing to take.
I nailed it. Some one did pay me for 10 contracts at $2.05 and I received $2050 for calls. The market recovered and volatility declined the rest of the morning. After 2 hours the calls were worth .85 and I covered at .90. The calls will probably expire worthless, but I don't want to be greedy and I locked in the gains.
Here is a chart of the option trading. Very low volume, but you can still close out trades if you are willing to time your trades well.
