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Trading volatility

Iprofit4sure wrote:
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$$.

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purealpha wrote:

Iprofit4sure wrote:
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. 

Iprofit4sure wrote:

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? surprise

Yeah, I use IB. Wasn’t aware they had a 33% limit cause I normally do 5% or a bit higher. 

purealpha wrote:

Iprofit4sure wrote:

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? surprise

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)

..........I learned the hard way last year what exploding delta feels like when you are short and naked

^ On ES futures margin is something like 5%, so people can leverage up 20:1 and nuke their account. yes

Iprofit4sure wrote:
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?

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?