After being assigned over the weekend and starting Monday long UVXY (entry point at $20.8/share), this $!#@ (…product) dropped like a rock and we were stopped out at $19.8/share. The frustrating part is that UVXY came back from the dead by the end of the day to close around $20.8 and went all the way to $21.8/share today (Tuesday). The sharp drop on Monday may have been the capitulation sweet spot that many traders are looking for as an ideal entry point. Being stopped out at that point for a loss wasn’t part of the original plan and is the worst possible outcome for this trade managed over the course of 3 weeks. Sometimes, being too mechanical is not working in your favor.
Today we sold some covered calls (small position) in UVXY at $21 and $21.5 for entry points at $20.2 and $20.8 to test the water, waiting for the reversal to be confirmed.