I sold 20 bear call spreads on the VIX at 23 and 25, with expiration in July, for 0.56 per unit. This gave me a credit of $1120 with a maximum potential loss of $4k-1120=$2880. It’s a small bet that volatility settles into historically normal ranges within the next 4 months. In that case, both my long and my short calls expire worthless and I keep the credit. Looking at a long term VIX chart, I think my odds are a lot better than the market’s implied odds of 39%.
Something close to this spread price is still available, but don’t gamble more than you can survive losing!
I had sold a put on TLT for $179 on 2/21. This has obviously done phenomenally well and is almost worthless. Will close it soon for pennies just to free up the $14.7k cash to buy index funds (glad I tied up the cash, BTW).
In preparation to make this trade, I’ve already sold a put on QQQ expiring 3/13 for $559. So far I’m up $274 on the QQQ put, and I might ratchet the strike price higher to collect more money and mitigate the risk of a fast rebound leaving me in the dust. Yet, for now my hunch is that we are in the typical dead cat bounce, I’ll get assigned 100 shares of QQQ, it’ll look bad for a while, and then I’ll do great over the next year.
For those concerned, this is play money, and does not materially affect my AA.