UVXY June 21, 2024 a good divergence but no clear pattern on SPY

Jun 26, 2024

At the start of the trading day Friday, June 21, 2024. UVXY, the short volatility ETF reached a new high near 26.2. The 10-minute chart clearly shows the higher top with the MACD diverging down. We expect The SPY to show the opposite and anticipate an opportunity to find OTM calls on SPY under 10 c and expiring that same day.

 The 10-minute chart of SPY at that time did not display a clear pattern with MACD divergence to the upside. Our opportunity to make money without the pattern in place is limited. Looking at call options expiring June 21, the first options available under 10 c were the 548s. They crept up to 14c and fell away from there.

 With no clear pattern on the major market ETF, we returned to UVXY and examined the options. The chart below shows the UVXY 25 put around 7c and rose to 60c in 2 hours.

While this is a good move, the volume on these options is in the hundreds rather than the many thousands we usually like for the major ETFs, and trading fewer contracts would be appropriate (10 or 20 contracts max)


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