Summer didn't draw to a close without telling us it was doing so.  If any VIX-watchers were sleeping, they're awake now. Most of the summer seemed flat and long as a football field, and while that should've been easy, I made it difficult for myself by trying from July 19th onward to profit from something that simply wasn't happening just because I wished it and staked it out repeatedly:  The return of any kind of volatility or at least the end of the silent, somnolent, stubbornly-immobile VIX.

As a review I noted on this chart the nine times I've attempted to get tickets to the early screening of the VIX show; five of them have already been detailed in past blog entries so I'll describe them only briefly.  The remaining four will be explained.


At point 1 in the chart, I had wrongly closed my volatility shorts ten days prior (and they had been appreciating in value nicely and would have continued, had I not made that blunder) and I was finally determined, fueled by bitterness, to put that yellow blob on the chart and call a bottom to volatility and a top to the related leveraged inverse security.  The chart depicts XIV, but it could just as well show SVXY; since I traded both at different points and since they chart essentially the same way, I chose one to represent both.  The chart starts on July 19th and ends yesterday, September 13th (as I write this.)  It also depicts high trades for each day, so the ups and downs of each day are not shown.

See my previous two posts for details of trades 1-5.  I'll summarize them in broad terms here:  In trade 1 I shorted SVXY on July 29th and also bought calls intended to protect me from any rise the shares might experience.  The trade was intended to run for at least a couple of weeks but when there was a deep intraday dip just two trading days later, I closed the whole thing for a profit.

In trades 2 and 3 I shorted shares of SVXY, first on August 3rd at a price that immediately went against me, and then again near the peak of an intraday high on August 9th the likes of which wouldn't be seen again for half a month.  The peak-shorting mitigated the damage the original shorting had done; I got out the next day with considerably reduced red ink, yet I remember the day of August 10th as being a volatile trading day in which I could have gotten out flat, had I timed it better.  As a footnote, I did take the opposite side of the trade immediately after that by shorting UVXY the same day and bringing in a profit on it the following day.

In trade 4 I shorted SVXY with a matched protective call on August 19th and added to that position on August 23rd with more of the same in trade 5.  On August 26th I closed it all out for a respectable profit.

This brings us to trades 6 and forward which are the September trades I have not blogged about yet.   Trade 6 consists of a day trade on September 1st in which I simply shorted XIV and closed it a while later for just ten cents lower.  (Lunch + gas money was my takeaway.)  I must have lost my nerve.   It's a good thing I did, since VIX visited the 11 neighborhood the next day and XIV took a hike higher up the mountainside.

Trade 7 represents my first real success in echolocating VIX on the ocean floor.  On Friday September 2nd I shorted XIV at 38.57 (see chart below.)  Within a few days the trade had moved against me to an apex of XIV touching 40.59 on September 7th.  At 800 shares, this put me behind by about $1,600.


I didn't even think about booking that, though; in fact, I looked the other way and forgot about it until I was awoken on Friday morning by my spouse literally holding a glowing chart over my face.  Our actual first conversation of the day was a whispered "VIX futures are up over three percent."  "Thirty percent?"  "No, three percent."  "Oh, OK, I'd better get up now."  Late in the day on Friday, September 9th, I thought I should harvest the fruits of the quick-growing VIX tree and cash in that short as such:

As you can see on the chart. 33.93 was the final print of the day and it chafes my brain to think that I could have closed the trade a little while later for an oversized dollar lower, but I must move forward and try not to dwell on it, because no pity parties are held for traders whining, "Coulda, shoulda, woulda."

Trades 8 and 9 bring us up to the current week.  See the detail and chart below for my XIV trades; the adjoining chart depicts same-day UVXY.  On September 12th I sold XIV short at 34.91; closed it the next day at 33.56.  A while later I believed I had made a mistake to close the short, so I re-shorted at 32.26.  Chop ensued for the next few hours so I closed it at 32.15.


With UVXY up more than 29% for the day on September 13th, I thought it might be safe to take some of the end pieces off that loaf of bread without being caught.  Sure enough, had I held that short through the present (Wednesday afternoon, September 14th as I write this), nearly two dollars have fallen off UVXY, but I didn't want to risk an overnight unknown so I bought it back just a few seconds before the close (oops - didn't mean to wait quite that long - timestamp: 03:59:47) for 24.58.  Detail:

Well, I started by saying that summer is over, but of course, it definitely isn't.  My favorite season won't be over until the very last day, which, by the calendar, is a week away.  Wait - did I say I like summer best?  It's VIX season I truly look forward to.  Is it here yet?  Can we start?  Can we invent a new season between summer and fall?   I'll be back soon with some tales of sightings of the wild VIX spikes, I hope.  Until then, enjoy the rest of your summer and the start of your VIX-er.