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Time to Take Initial Profits on Volatility

Volatility is up by approximately 30% from the time I made this recommendation (May 4) to profit from a potential spike in volatility. Volatility has spiked due to the current stock market correction and I believe it is now time to take profits on this trade.

17%-30% profits in approximately 45 days is not too shabby.

The conservative strategy would be to close out 100% of the position(s) and take all profits now.

Buy back to close the short position XIV at approximately $19.30 or lower

Sell to close the long position UVXY at approximately $78.80 or higher

Please note, these are not recommendations of new positions, but rather CLOSING trade instructions.

A more aggressive strategy would be to sell half of the position(s) now, locking in profits and wait to see if current volatility feeds into a larger volatility spike and more upside on this trade. If implementing the more aggressive option, please keep a trailing stop/buyback in place to protect principal and profits at about $70 for UVXY (sell stop) and $21 for XIV (buyback stop).

Positions: I am currently long UVXY. I sold half of my position today and am keeping half of my position in play for additional potential volatility with an intent to sell soon if additional volatility occurs or if the markets rebound and volatility settles back down.

Disclosures: Stock trading involves risk and can result in a loss of principal. Leveraged ETFs may carry additional risk, particularly if the position is held beyond a single trading session. Do not invest in stocks or ETFs if you cannot afford the entire loss of your principal.

Written By: Joshua Ungerecht
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Equities, Stocks, UVXY, Volatility, XIV