February 20, 2015  Trade Alert -  Pattern Play  Portfolio – LIMIT ORDERS

VIX is at 15.70, well above the 12 -14 range of the last year but not much above the 15 resistance level it seems to have in 2015.  This means we cannot expect SVXY to soar because VIX falls substantially.  Contango is just under 5, about the average.  On balance, we should expect that SVXY will increase by about $3 (5%) over the next month, unless something comes along to push volatility higher.  Accordingly, while we can bet on a higher price for SVXY going forward, we should not expect it to soar.  These trades should do well if there is a moderate move to the upside (of course, we can adjust in a week when the short sides expire):

 

BTO 1 SVXY Mar-15 59 call (SVXY150320C59)

STO 1 SVXY Feb4-15 61 call (SVXY150227C61) for a debit limit of $3.10  (buying a diagonal)

 

BTO 1 SVXY Mar-15 59 call (SVXY150320C59)

STO 1 SVXY Feb4-15 62 call (SVXY150227C62) for a debit limit of $3.40  (buying a diagonal)

 

BTO 1 SVXY Mar-15 59 call (SVXY150320C59)

STO 1 SVXY Mar1-15 63 call (SVXY150306C63) for a debit limit of $3.10  (buying a diagonal)

 

If these do not execute in 3 minutes, raise the limits by $.03 and try again for 3 minutes, and repeat this process until an execution is successful.

 

 

Happy trading.

 

Terry