Trade Alert: Selling SVOL

1 Sell

Author

Armchair Income
October 09, 2024

I’m selling SVOL as explained below. I’m not a trader so I don’t expect to send out “Trade Alerts” like this often. Also, excuse the rudimentary graphics but I thought time was more important than presentation.

Trades

SVOL: Sold (Exited 4.6% Allocation)

SVOL generates income by taking a short position when trading VIX futures contracts. Most of the time the market is calm and this is a steady income generation strategy. Occasionally conditions are not ideal for this strategy and those conditions are 1/ A rising VIX and 2/ a VIX Futures Term Structure in “Backwardation”. Both of those conditions are currently underway.

In other words, the market is anticipating volatility in the next 1-2 months. This may be due to the US election, conflict in the Middle East, etc.

I can’t predict the future, however, based on the shape of the VIX chart and the VIX Futures Term Structure charts shown below, I’m selling SVOL out of caution. I plan to buy back in again when the conditions return to optimal (low VIX and Term Structure in “Contango”).

I’m not telling anybody else what they should do, but I do want to disclose what I’m doing, so that you can take that information into consideration for your own investment strategy.

Over the coming days I’ll figure out where to redeploy the SVOL capital and issue another update.

If you’re not familiar with the Term Structure concept, it’s explained here.

How it should look…

How it looks currently….

VIX is rising

Basic Resources

Advanced Resources

Thanks for stopping by…see you in the next issue!

Regards,

Armchair Income

Disclaimer: I’m sharing information about my investments, but I’m not making any recommendations to you to buy or sell anything. Each investor has their own goals, risk tolerance, and timeline, and must make their own investments decisions…then take responsibility for those decisions. I’m not a financial advisor, and I don’t advise anybody regarding their investments. If the information in this newsletter is useful or helpful in any way, then my goal is achieved :) Some of the links provided above may be associated with affiliate programs. If so, use of those links will not incur any additional cost to the user (and will, in many cases, provide a benefit to the user) and may result in a referral commission to this newsletter.