I’m trading like a moron, not a monster. $VXX $UVXY $XIV $SVXY $SPY

Several years ago, you couldn’t watch CNBC for any length of time without a commercial for TradeMonster. I opened a TradeMonster account and actually attended a seminar in Newport Beach with Pete Najarian, Dan Fitzpatrick and Guy Adami. It was 2013, I think. 

On these commercials, they implored you to ‘Trade like a Monster’. 

Today, I’m not trading like a monster. I’m trading like a moron. 

In my speculative account, I have held a long position in VXX and UVXY for a year. I wrote covered calls against these positions, week in and week out. Many times, I would only get the proverbial nickels. 

This worked until last week when both the VXX and UVXY simply just exploded. I got caught a bit offsides as I was short calls. For the UVXY I was short the 20 calls that expire next week when my cost basis was around 11.  

Granted, that’s great right? I mean making $9 on each of these is a good, almost 100%, return. But on Monday the 5th, these popped to over 35, 38 in after hours. Its trading around 26 today. 

Late in the day, thinking that this was overdone, I bought a small amount of XIV at 96. It closed on the 5th at 99.  Today its about 6.

After hours, these derivatives went bonkers, bananas, ape sh*t crazy. 

The next day as things corrected a bit, I was able to buy some calendar debit spreads on VXX and UVXY to take advantage of this volatility on the volatility.  

My longs in UVXY and VXX more than offset the loss I have taken in the XIV. On the volatility trade, I am making money. The other names are a different story.  

Yesterday and today, I hear from Jim Cramer that I am a moron for buying the XIV. I think he said only a moron would buy it.  

Well, as they say, you can’t fix stupid. Yesterday I bought some calls in SVXY. Fidelity won’t let me buy the ETF but they will let me buy calls. I bought more today, specifically the June 10 call for 2.58. 

Remember, it was just a week ago that the SVXY was trading about 130. It went out on Monday around 58. 

It would be wonderful if SVXY goes up to 58 or 100, but if it just goes above 12.58, these calls make money. Everything above that is gravy, or icing, you choose the metaphor. 

In addition, I have bought a March Put spread in the VXX, I bought the 35/30 spread for 0.75. 

If volatility comes back to anywhere near normal, these pay off. The SVXY trade will pay off like a lottery ticket. 

But you really shouldn’t listen to me, I’m a moron.