I'm going to be traveling from mid-June to mid-August and won't be on the screen watching things in the market as I usually do. Thus I want to hedge a short UVXY position, 1650 shares, basis of 13, against a catastrophe, volmageddon, black swan, whatever. I can handle a 100% draw down (the position is a low single-digit percentage of my trading account) and even a bit more, but if it moonshots up like it did Jan/Feb 2020 or 2018, I want a hedge. I figure long calls somewhere in the 25 to 30 range, August 19 expiration. What's the best trade for this? Buy the protection and then pay for it (its expensive) with short calls with expiration of a much longer date and expiration? Examples? Just hedge half? VIX alternatives? Thanks in advance. I know this is work.
If you are short UVXY you are short volatility no? Can't you just buy VIXY in the right amount to go long volatility, in the right $ amount, to even them out roughly? I forget the ratios for UVXY and VIXY, I thought UVXY was supposed to be like 150% the VIX but that might have changed.
Guys I'm looking not to hedge out my profit, just keep me afloat in case of a massive spike up. Going long another product will cost me lots over the time I am insuring.
If you want insurance then the math says to forget that idea. You make money selling insurance, not buying it. If you want to eliminate exposure then sell some shares. It's the cheapest way to get the job done.
if you don't mind tying up a bit more capital, buy calls in Sept or further and just sell them when you're back home. The further you go out in time / moneyness the less "rent" you'll be paying over the vacation time