Closing Pair Trade of Long RSP vs. Short SPY
Sell RSP @ $148..51 (loss of 2.53%)
Cover SPY @ $416.17 (gain of 3.78%)
Total Gain of 1.25%
One of my rules is to reduce gross exposure on volatility spikes. Sometimes that means selling the fringe long ideas. Sometimes covering shorts. But almost always that means closing pair trades. The fact that this was a profitable trade is great!
Smaller stocks have already sold off relative to the large caps (the thesis behind this trade) but they're also likely to lead on any major selloffs. Like more major than this one.
I'm thinking the next leg is up, though whether that starts today or in a week is anybody's guess when the VIX is over 35.
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