These type of days are very rare, but if you find them, then it’s worth trading the volatility. Today I traded the 3x Bull ETF FAS both on the long and on the short side. The market certainly played out that way as we saw the Dow rally from down -200 to +90 back to down -50. From my notes last night I had Vix @ 55 as a rally point, and wow, did we sure get that set up! Here’s an analysis of my successful day trades. I made one error at Vix 52.46, where it seemed like support was building so I went short on FAS at 14.30. It was a bit too early so exited for a loss at 14.50. However, under VIX 50 I re-entered the short at FAS 15.25 (near the top!) and added at 14.70 and watched as it fell apart… all…the…way…down… under 13. I covered at 13.14. During that period of panic sell on FAS, the market reversed from +80 to -50. Seeing the Dow/SPX red was NOT what the FAS bulls wanted to see. Incredible!
At the end of the day, I made out about 3% on the long side, and 12% on the short side for FAS. If I bought and held FAS from my entry point at 13:20 pm, then I would have came out with 7.45%. Again, I don’t consider myself as a traditional day-trader, but rather a volatility trader. I rather go out and play in the sun than watch green and red tickers. But if volatility is on the tape, then I’m usually there to trade it. Thought process of these trades can be found on my twitter.
Today was crazy. Now relax brah…