I wasn't planning on any trades today, I thought I'd hold some powder back, but an opportunity opened up and I decided to take it. The $VIX climbed today and along with it, the $UVXY, the 2X Ultra VIX Short Term Futures ETF. $UVXY is a function of the $VIX, which is known as the Fear indicator, a measure of volatility. When the $VIX goes up, it generally means the market is going down, although that wasn't the case today.
The market has been pretty complacent lately, and despite all the political rumbling, I didn't see anything that was an immediate reason for the spike in the $VIX or $UVXY, so I decided to open a trade against it.
I shorted the $19 March 24 call (next week's) and bought the $24 strike for the same time period. It gave me a net credit of just under a dollar at the time. $UVXY was trading at $19.50 when I made the trade, up a dollar. It gives me a week for it to drop back under $19 to get the full credit. Remember, Monday is a markets holiday, which is calculated into the option price.
The stock traded as high as $20 and closed at $19.80, so I could have done a bit better. We'll see. I spoke to someone after the market close who said it was $VIX expiration this morning, and it's not usual for the index to behave oddly at expiration. Technical mumbo-jumbo. If so, all the better for a pullback.