Yo Pit Crazies,
I’m still on vacation and Memorial Day has me thinking about things we should not forget.
Those who made the ultimate sacrifice for our country, for one.
Without that, who knows where we would be today?
While they thankfully weren’t killed in active duty, my dad and granddad both served in the military.
Dad was a captain in the Navy, and we still have to remind him every now and then we are not his crew.
I never met my granddad who died of cancer young, probably as a result of getting gassed somewhere in France in 1918.
He did make it long enough to have a bunch of kids, one being my mother.
Lucky break for me!
He managed to become a furrier, of all things, and opened the fur department of Neiman Marcus in Houston in the 1930s.
A far cry from the trenches of France.
After we give thanks on Memorial Day to those who sacrificed, the markets will be back open … and who knows exactly what will happen?
In trading, the past is a good prologue so read on …
Also, don’t forget that tomorrow, June 1, Mark Sebastian will be releasing three ProShares Ultra VIX Short Term Futures ETF (Ticker: UVXY) trades EXCLUSIVELY to Option Pit Volatility Edge members. You can still get in at a special price, but you have to sign up before 5 p.m. today!.
UVXY Is a Melting Ice Cube (Most of the Time)
Speaking of UVXY, it’s a product that acts a certain way.
Mark will talk reverse split on Tuesday, but notice how it moves:
Two-year chart of UVXY. Note the spikes in price and the long slides down in value.
The active phrase is:
UVXY takes the elevator up and the escalator down.
Since UVXY is a volatility product priced from the front two month futures in VIX, it can only go so far up and so far down.
It’s not like an Apple (Ticker: AAPL) or an Alphabet (Ticker: GOOGL) that can keep going and going.
UVXY is “mean reverting.” The gist of that loaded phrase is the underlying returns to an average level at some point. This orbital movement informs the trades that work the best.
I know a guy who can help with that.
The Lesson: Mean reverting is a big concept in options because it helps define what a product can do.
Questions about any of that? Drop a comment below!
To Your Trading Success,
AG