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VRA Alert: Bought UVXY. Nvidia Earnings & VRA Portfolio Game Plan. Interesting Internals Point to “Textbook” Consolidation.

Good Wednesday afternoon. VRA Alert: We bought UVXY (3 x lev Volatility ETF) @ $7.83. This is a trade only and we will keep stops in the 15% range (meaning if UVXY falls to $6.65 we will sell). Question from VRA Member Nathan abo ...

Posted On February 21, 20244 MIN Read
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Good Wednesday afternoon.

VRA Alert: We bought UVXY (3 x lev Volatility ETF) @ $7.83. This is a trade only and we will keep stops in the 15% range (meaning if UVXY falls to $6.65 we will sell).

Question from VRA Member Nathan about this hedge:

Question: What percentage of hedge do you put on your portfolio?

Example: $100k account, $10k in hedge? Or 25k? Never done much hedging other than selling calls or literally taking a short leveraged ETF, but not sure what percentage of my portfolio value I should put towards a hedge.

Not looking for advice but rather how you think about it in your portfolios. Do end up using margin or always keep enough cash on hand for a hedge opportunity?”

My Answer: As a rough guide a 5% portfolio hedge makes sense. The best portfolio hedges are those that we actually lose money on (purpose/cost of portfolio insurance). Using a leveraged product like UVXY reduces our need for a larger dollar amount hedge. Margin is fine, for short term trades...

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