I am placing a 100k bet (won’t call it an investment) long vol here in the next week. Going to watch markets everyday and sure holding it I will probably lose consistently, but when it doubles on some random day between now and year end, i’ll be waiting…sounds stupid right? well I am not alone. A trader on the street bought calls expiring in OCT strike of 25 and the amount was so much that he stands to profit 256 million dollars if that happens.
Anyone have thoughts/ready to rip this apart? 
market has been boring.
UVXY… im in.
I don’t like a basis of approx $30 tho. Cotango will chew dat ass up. ill sit for a while.
What level compels you then? I just think that when we look at time series data going back to before 1900 and can see that volatility reallllly displays a pattern, how couldn’t a trader/investor not be somewhat interested…
For fun, feel free to comment whether you think I will “win” or “lose” between next week and year end. I’ll be curious to hear responses and what the consensus is
my intent is not to dissuade you.
i’m team “market repricing” all the way… I fear being early in that vehicle because of its negative roll yield.
it just experienced a reverse stock spilt in mid July. economic data and consumer confidence is strong. this thing can drop to sub $10. i don’t want to get caught at an elevated basis then recoup my original investment after a volatility event. ill start to take it more seriously if it drops into the $15-20 band
Is consumer confidence strong though because they are being offered personal lines of credit at an insane pace and are more than likely using it as an extension of their income? Defaults on bank card loans are at a 48 month high and wage growth is pretty poor from what I have read. I obviously like the trends in unemployment rate, but also what about auto manufacturers too. They are so badly upside down on leases and they are all coming due very soon.
Hate to say it, but I am not sure if our human DNA is programmed to have “learned our lesson” from the greed that spurred the sub prime mortgage crisis. Generally, Americans being some of the worst, do not understand how credit works and this is a huge issue from a macro perspective.
UVXY though could definitely head significantly lower from these levels. For sure agree there. However, I am not looking for a credit event/black swan between now and year end per say. Rumors of war and geopolitical instability should be enough to do the trick. If the former happens, and I hold a position (ie huge correction), might quit my job. I’d more than likely get laid off anyway haha
its your coffin man.
but…
i do like where Goldman is estimating the probability of a government shutdown. definitely will send short term tremors through the market like 2013.
Uh…if what happens with the government shutdown is like anything what you are referring to that happened in the summer of 2013, I probably wouldn’t just quit my job, I’d retire. That would be 12x on a 6 figure investment.
I just think that I am young, do not have a mortgage, or kids. So I am going to see how much I can stomach/put a check on my emotions. You have an article in regards to that probability? I’d like to read it.
https://www.cnbc.com/2017/08/18/goldman-there-is-a-50-percent-chance-of-a-government-shutdown.html
failure to raise the debt ceiling would be even worse.
Yup. I shorted the last two Kim Jong-un related VXX spikes. This has gone on for 50yrs, and I’ll keep shorting every Kim-related non-event.
And if I ever end up being wrong, I’ll be evaporated by a missile strike and won’t have to pay the losses anyhow! 
Those events are no brainers to short but what about a slow and gradual increase in VIX? If you are short, it seems like you must have cash to keep shorting as it goes higher and higher. Theoretically, the amount the VIX can rise is infinite and the amount of cash I have is not.
Do you sit on the sidelines always until a big event causing spikes happens first or do you stay in a long term short position and just keep shorting as it moves higher? Which is better?
I just closed out most of my Kim-short in after-hours, usually I’m only in for days or a week. This year however I’ve been churning; kept a relatively small short balance that decays away, underneath the larger trades around vol events.
Usual disclaimer: vol is dangerous, I spent years in industry building models and am kinda a bad a$$.
Well, I just found out that IB is limiting short UVXY positions to something like 33 percent of account equity balance. Is that the broker you use? Do you know of any brokers that have less strict requirements for shorting 2x leveraged ETPs? I have an IRA account but opened this IB one with 50k just to mess around, however, I want to use ALL of that money to short it, not like 16k.
Haha, isn’t that a little bit risky? Trolling? 
Yeah, I use IB. Wasn’t aware they had a 33% limit cause I normally do 5% or a bit higher.
This is fun money, I guess I could move 150 into the account, then that would let me use all of the 50 I want, or I might just check out SVXY. Thoughts on SVXY being long?
IB just introduced the limit like a month ago. I get where they are coming from.
Surprised IB introduced that new rule. Aren’t they known for ridiculous margin requirements on futures (as low as $500/ contract ffs)
^ On ES futures margin is something like 5%, so people can leverage up 20:1 and nuke their account. 
A couple years ago when CN moved their currency 2% without warning, VXX spiked 60% or something, so if you were short that would be a $90K drawdown, and it took 6 months to recover. If someone were going to go crazy with play money, they could go long XIV (or whatever inverse vol fund), that way you can’t lose more than 100%. Since the broker is protected, perhaps there is no limit on inverse vol?
I shorted it!
Closed the short, easy money.
But holy f@#$ can we get some real vol though? This is children’s stuff. Back when I was a kid the S&P moved around like bitcoin!
Shorted vol again. 
Update post memo release: doubled down.