WTF? I thought this market was supposed to only go up? $VXX $UVXY $SPY $AMZN $AAPL $GOOGL

The Selloff

Today it happened, the market sold off. Particularly the $SPY and $QQQ and $DIA took it on the chinny, chin, chin. 

What didn’t go down? $AMZN for one thing, and $NFLX  and $FB only fell about 1.5% when the QQQ was down 2%.  

OSTK, on the other hand, was down almost 16% closing at 56. 

But in my speculative portfolio my holdings in VXX and UVXY were up 13.5% and 27% respectively. 

I hold this stuff in my portfolio just for days like this. I never know when they are coming, but that’s why I hold it. 

Volatility is here to stay, deal with it! 

Turns out the CNBC chyron from a few days ago was correct. At least through today. 

I’m gonna try to detail what I did with my volatiltiy options since three days ago but if this sounds like nails on a chalkboard, please skip down to my SPY section below. 

You’ve been warned! 

Three short days ago I sold covered calls in my holdings of both UVXY (at 15) and VXX (at 30). These were scattered over the Feb 2 (today’s) expiration, Feb 9 and Feb 16. 

The next day volatility retreated and I and I put on one calendar put spread for each 100 shares of each of the two names buying the Mar 16 puts and selling the Feb 16 puts at the 27 level in the VXX and 12 in the UVXY. 

Yesterday as volatility retreated even more I rolled the covered calls up and out, to 31.5 for the VXX and 20 for the UVXY. I also put on some matching call calendars at the 30 level for VXX and 12 for the UVXY.  

Good thing, since these two names closed up on the day VXX closed at 13.76 and UVXY closed at 32.92. 

I’m happy where this ended out. Now on Feb 16 I have both some (virtual) strangles (in the VXX) and straddles (in the UVXY). 

Buying the SPY

Is this the start of the big decline, or just a minor pullback? I don’t know, it might be but my feeling is that this is temporary. When earnings keep coming in hot, and projections are for increasing revenues, it is hard to imagine this will be a prolonged pullback. Could it go down another 3%, 5% or 7% or more? No problem. 

But besides squaring up all my expiring trades today, I also bought small amounts of SPY and a micro amount of TLT.  

I may add to my XIV if it has another day like today and I’m looking to sell some put credit spreads in the SPY and close out some of my long put spreads in the same (which is really the same thing – selling a higher price put option and buying a lower price put option, its just with the debit spreads I already own the spread) 


Good luck next week ! Check back this weekend for some updates.