Thursday Update: New Special Situation

Late last year I promised an expansion of our Special Situation portfolio. One goal is to add additional "non-option" trading opportunities, another is to compensate for option table trades that have been closed out leaving too much of our cash sitting on the sidelines. But the biggest reason is to exploit shorter term opportunities that have excellent risk:reward parameters

Today I am adding UVXY, with the proviso that it needs to close above yesterday's high of $10.10.  The target is $15-20 (50-100%) , the risk is a close below $8.50 (15%). 

We have bought UVXY before, to no avail. Do not let that deter you, as it doesn't cancel out the very favorable risk:reward set-up. With a $10 entry, a run back up to early December highs ($17) provides the potential for a 70% gain. That's the equivalent of about a 10% decline in the major market averages, making the trade highly leveraged to a market decline that practically no one is expecting based extremely high bullish sentiment numbers that have signaled intermediate market declines for over 50 years.  Is it going to be different this time? Let's risk $1.50 on this trade and find out.  Remember, it will take a close above $10.10 to trigger the Buy...which could be seen as early as today. 


We exited our previous GBTC Long as 2382, sidestepping the panic low of 1155 on Dec 22nd. As per the Special Situation table below, we do not go back Long until GBTC on a close above 2285. That trigger is gradually moving its way lower so keep an eye on it going forward. 


Trading Tables