Practical results of SVIX operation (1)
Friends who have read my previous articles know that I have written four articles, two about VIX, one about the losses from leveraged and inverse ETFs, and one about Options, all of which are more theoretical and technical. Although the response has been pretty good, it seems that sharing practical operational insights may resonate more with everyone.
1. Decisively abandon the SVIX ETF.
Initially, when the VIX surged, there was actually a Buying of the SVIX ETF (buying from $12 all the way down to $10), but considering the investment amount and time (The time cost mainly requires time to wait for the paths and VIX's backwardation to pass, specific points can be found in the analysis articles mentioned earlier.However, decisively sold the ETF and replaced it with several Call Options on SVIX. Due to the leverage structure of Options, if SVIX rises from $12 to $14, the returns on buying Call Options on SVIX will far exceed those of the SVIX ETF, though the risks are also higher, making it suitable for those willing to take big risks with small investments.
2. Chose to Buy the SVIX single leg Call.
In general, many advanced options strategy practitioners do not recommend buying a single leg Call, but considering the differences between VIX and company Stocks, the single leg Call was still used as a tool.
The reasons are as follows:
1. The structure of SVIX differs from that of company stocks, as single-leg Calls/Puts have more advantages.
Traditional company stock options usually do not recommend single-leg Call operations, as stock price fluctuations are constrained by fundamentals, movements are slow and often trend sideways for long periods, which easily leads to directional mismatches or loss of time value.
SVIX is essentially a leveraged ETF that shorts the VIX, without any company fundamentals to support it. The price is entirely driven by market sentiment and the VIX structure (such as Contango or Backwardation, see specifically the futures structure).Futures structure.The price movements tend to be explosive, with sharp rises and falls, and it is not typically something that would be held long-term like company stocks.
This means that the options on SVIX are more volatile, Vega and Gamma are more active, making it more suitable to use small positions for short-term directional trades with single-leg Call/Put options, rather than for hedging or combined strategies.
2. Both VIX and SVIX exhibit high volatility.
• High volatility = high Vega = suitable for short-term Trading of Calls/Puts, using "single leg Call/Put" to capture market surges.
Traditional company stock options usually do not recommend single-leg Call operations, as stock price fluctuations are constrained by fundamentals, movements are slow and often trend sideways for long periods, which easily leads to directional mismatches or loss of time value.
SVIX is essentially a leveraged ETF that shorts the VIX, without any company fundamentals to support it. The price is entirely driven by market sentiment and the VIX structure (such as Contango or Backwardation, see specifically the futures structure).Futures structure.The price movements tend to be explosive, with sharp rises and falls, and it is not typically something that would be held long-term like company stocks.
This means that the options on SVIX are more volatile, Vega and Gamma are more active, making it more suitable to use small positions for short-term directional trades with single-leg Call/Put options, rather than for hedging or combined strategies.
2. Both VIX and SVIX exhibit high volatility.
• High volatility = high Vega = suitable for short-term Trading of Calls/Puts, using "single leg Call/Put" to capture market surges.
3. Insights on operating SVIX Call Options.
The following is the result of just completing the first trade of a Call option with a strike price of $14 on May 16, 2025. The purchase price is $0.2 (The strike price at the time of purchase is relatively far from the current price, so it is relatively inexpensive.), and four days before expiration, I placed an order to sell it at a price of $0.75 (This was mainly due to the surge in SVIX today, but when I woke up this morning, the price of this option had increased to $1.2.）。
It is indeed possible to wait until the expiration date (the probability of being exercised is about 60%+), but considering the current price level is too close to the strike price and expiration date, I decided to sell decisively.
The main reason is: considering that if SVIX falls below $14 tomorrow or the day after, this option could easily become worthless before the expiration date. A couple of days ago, when SVIX was hovering around 13, this option was already worthless, so sometimes it's important to be patient and stick to your judgment.
The next few Calls will be completed before sharing with everyone.
Additionally: In the Papertrade competition on moomoo, I also operated SVIX. I personally feel that paper competitions are very suitable for practicing Options, and I recommend that beginners in Options first use simulation to adjust their understanding and operation of Options before using their own real money.
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This content is solely for the purpose of reviewing my trading records and strategies and does not constitute any recommendation or investment advice for financial products. The market involves risks, and investments should be made cautiously. This Account is not a licensed financial service provider and is only for learning and discussion reference.
This content is for educational and informational purposes only. It does not constitute financial advice or a recommendation to buy or sell any securities. I am not a licensed financial advisor. Investing involves risk, please conduct your own research.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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