Trade #1 SVXY put sell

Ovesting.com is based upon the idea that you learn best through observing. This blog is designed to give you an inside scoop into my investing style. I am trading a real account with real money. I hope you learn from both the profitable and losing trades that will occur in this account over the years. Please feel free to engage and ask questions along the way.

I trade multiple strategies in other accounts. This account has sat in cash the first week of the year. Today was the very first trade of 2017 and will keep track of the trades going forward. I use this account usually to test new ideas or if there is an opportunity that I see that does not fit in one of my other current strategies.

---

Starting account balance: $18,947.19

Trade #1

January 12th 2017

Sold 2 puts on the SVXY

Strike price $100

Credit collected $2.23

Expiration: January 20th (8 days)

Screenshot of account at end of day & SVXY chart for the day

---

SVXY is an ETF that shorts VIX futures. Based on the decay of futures contracts, better known as "contango," it will slowly move up over time with sharp drops when VIX moves up. VIX is known as the volatility index and is based off of options traded on the SPX (the S&P 500 index). I am willing to own this ETF, so instead of buying it outright, I sold a put contract for a lower price. I basically got paid to say I would buy SVXY for $100 anytime within the next 8 days. Now if SVXY does not go below $100, the buyer of this options contract will not use the contract (known as exercising) and it will expire worthless. I will keep the money and they will keep their SVXY position.

I did not expect such a massive rally at the end of the day. Otherwise would have made more sense to just buy the ETF. Selling puts on a stock you would like to own is a good way to get paid to wait.