Trade Alert – (VXX)- TAKE PROFITS
SELL the iPath S&P 500 VIX ETN (VXX) April, 2017 $14.00-$14.50 in-the-money vertical bull call spread at $0.49 or best
Closing Trade-NOT FOR NEW SUBSCRIBERS
4-10-2017
Expiration Date: April 21, 2017
Portfolio Weighting: 5%
Number of Contracts = 130 contracts
Ah yes, there’s nothing like buying the Volatility Index (VIX) one cent above the low for the year, and two days before a US surprise attack on Syria.
That enabled me to capture an amazing 30% increase in the VIX.
It looks like this can be the trade that keeps on giving.
But to take advantage of future trades like this, I am going to cash out here, get some dry powder, and buy the VIX back on the next big dip.
Yes, I’ll take a 28.94% profit on a position in only three days. That’s what money making is all about.
This trade was a total home run.
I am therefore selling my position in the iPath S&P 500 VIX ETN (VXX) April, 2017 $14.00-$14.50 in-the-money vertical bull call spread.
In any case, there are only eight trading days left for this position until the May 21st expiration.
We have already milked this baby for 91.66% of the maximum potential profit. The risk/reward in going on is pointless.
My only regret is that I didn’t go larger with this trade. However, greed is always the death of a beginning trader.
Volatility is a tricky beast best dealt with in small doses.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of OptionsHouse.
If you are uncertain about how to execute this options spread, please watch my training video “How to Execute a Vertical Bull Call Spread”.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile with only eight days to expiration.
Please keep in mind these are ballpark prices at best. After the text alerts go out, prices can be all over the map. There is no telling how much the market will have moved by the time you get this email.
Paid subscribers, be sure you’ve signed up for our FREE text service for Trade Alerts. When seconds count, this feature offers a definite trading advantage. In today’s volatile markets, individual investors need every advantage they can get.
Here Are the Specific Trades You Need to Execute This Position:
Sell 130 April, 2017 VXX $14.00 calls at…….….………..…$2.80
Buy to cover short 130 April, 2017 VXX $14.50 calls at…….$2.31
Net Proceeds:………………………………………………$0.49
Profit: $0.49 – $0.38 = $0.11
(130 X 100 X $0.11) = $1,430 or 28.94% profit in three trading days.
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ABOUT THE AUTHOR
The Diary of a Mad Hedge Fund Trader is written by John Thomas, one of the founding fathers of the modern hedge fund industry.
Seeing the incredible inefficiencies and severe mis-pricing offered by the popping of multiple bubbles during the Great Crash of 2008, and missing the adrenaline of the marketplace, he returned to active hedge fund management. With The Diary of a Mad Hedge Fund Trader, his goal is to broaden public understanding of the techniques and strategies employed by the most successful hedge funds so that they may more profitably manage their own money.
John graduated from the University of California at Los Angeles (UCLA) with a degree in biochemistry and a minor in mathematics in 1974. He moved to Tokyo, Japan to join a Japanese securities house as a research analyst, becoming fluent in Japanese. In 1976 he was appointed the Tokyo correspondent for The Economist magazine and the Financial Times. For the next seven years he published thousands of articles about the economies, companies, and leaders of Asia. He was one of the first American correspondents to cover China during the Cultural Revolution.