When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (VXX) - BUY
BUY the IPath S&P 500 VIX Short Term Futures ETN (VXX)March, 2018 $60-$65 in-the-money vertical bear put spread at $3.90 or best
Opening Trade
2-8-2018
expiration date: March 16, 2018
Portfolio weighting: 10%
Number of Contracts = 26 contracts
I know a lot of you now are terrified, depressed, and discouraged.
I want to show you that I am watching this market 24/7 and analyzing it from every angle attempting to find the low hanging fruit during a hurricane. I've got your back.
A lot of you have been baying for another way to short the Volatility Index (VIX) here after the inverse ETF's and ETN's have all blown up and gone to money heaven.
Here is a humdinger.
I don't believe the (VIX) will surpass the Tuesday morning high at $52.50.
I am therefore buying the IPath S&P 500 VIX Short Term Futures ETN (VXX) March, 2018 $60-$65 in-the-money vertical bear put spread at $3.90 or best.
This is a bet that the (VXX) will not trade above $60 at the March 16expiration date in 30 trading days. That is an eye popping 16.39% above the current level, and 9.09% higher than the nine-year Tuesday morning high at $55.
You only need volatility to take a brief rest to earn significant money on this trade, and I believe we are approaching a point of utter exhaustion.
In other words, to lose money on this trade, the (VIX) would have to take a run at the 2009 high of $89.50. That is an event I am ready to bet against.
Unlike the (XIV), the (VXX) is a long volatility play, so there is no way this instrument will suddenly blow up overnight. In addition, with a spread format you can't lose any more money on this trade than what you put up.
Don't pay more than $4.30 for this position or you'll be chasing.
If you don't do options stand aside. This is a rare case where you really need the protection only available through options.
Here are the specific trades you need to execute this position:
Buy 26 March 2018 (VXX) $65 puts at..........................................$18.50
Sell short 26 March 2018 (VXX) $60 puts at...........................$14.60
Net Cost:.......................................................................................
Potential Profit: $5.00 - $3.90 = $1.10
(26 X 100 X $1.10) = $2,860 or 28.30% in 30 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
You must be logged into your account to view the video.
Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
