VXX P/L & VXX / UVXY charts

Again, this isn't a reflection of anything more significant than what I posted last night and it is much more about the difference between trading options and equities, even 3x leveraged ETFs.

For those of you who don't know my PERSONAL preference regarding options, to sum it up as succinctly a I can, options are a form of Wall St. derivative, they are by design set up like Vegas or the Lotto, the House always wins in the end and if you think about them and why "most" people use them and how they use them, they treat them more like a lotto ticket than a tool that has a place in trading. In short, I tend to try to do the opposite of the allure of options, I tend to buy more quality rather than use them as a cheap way to control a lot of stock (in the money and a longer expiration than I think I need) and I don't treat them as a lotto ticket, but a way to play a good signal that otherwise doesn't have the profit potential. I'd rather close them out and take whatever gain or loss rather than sit through a pullback or correction and watch their value deteriorate. If the opportunity is there, I'll re-open them at more favorable prices. I don't hold on to them hoping for better prices or get greedy or look for triple digit returns, in essence I try to avoid the traps that are inherent in options, the reasons why so many expire worthless.

As you can see this is barely a break even position, that's not what matters to me, what matters is whether I think there's a better chance that they pullback and lose value (through time decay for instance).

UVXY is doing better at a 7+% gain right now. The draw down in UVXY is tolerable for me and when weighing the probabilities, it makes more sense for me to sit through a pullback/correction here as the leverage is significantly less and we are not dealing with the same dynamics such as time decay for one.

Have you noticed just about every "Core Equity Position" is a straight long or short with no leverage? Leverage in my view is a tool just like options (one in the same really), if I don't need the leverage to make the position worthwhile, I'd rather forgo it.

 VXX 2 min going from a very good 3C trend confirmation to a positive divergence, it's not very large, it's not on a very strong timeframe, but it's enough to damage the option.

VXX 3 min is a little more serious because of the longer timeframe, but again it's nothing that has to do with the trend expectations, just short term intraday or day to day "Noise" that is meant to keep traders guessing and create some movement and opportunities.

This is the 3 min chart of the leveraged version of VXX, UVXY, both are short term VIX futures and both trade opposite the market (with caveats here and there like anything in the market).

VXX 5 min -The more important trend and you might say the reason I don't mind keeping the UVXY long open is this leading negative divergence on a 5 min chart which is a much stronger timeframe than those above.

In fact 3C is leading to a new low for the chart.

As you can see, the 5 min chart of UVXY looks almost the same, that establishes decent confirmation.

If you know VXX is likely to rise, than you know the market is likely to pullback. I'll remind you that VXX is 1 of the 3 SPY Arbitrage assets, the other two being TLT and HYG.