As the market wound to a close on Thursday June 23rd, 2016 an interesting event driven trading opportunity presented itself. The U.S. equity markets had spent the trading session rallying and implied volatility as represented by the ultra-VIX exchange-traded fund UVXY had spent the session selling off:
This created an interesting trading opportunity; what if the ‘leave’ vote won in a surprise turnaround? Or, what if the ‘remain’ vote won and markets decided to sell the news the following day? After all, at least some of the good news, if not all of it had been priced in by markets rallying on optimism in the days leading up to the vote. Simply stated, the risk/reward proposition presented by fading some of the optimism was compelling.
Here are our trade posts in the Trading Lab at CEO.CA from June 23rd to June 24th:
We ended up taking 3 more intraday trades on Friday June 24th, 2016 which ended up totalling profits of more than 40% on a dollar weighted basis in one single trading session.