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) May, 2018 $32-$35 in-the-money vertical bull call spread at $2.55 or best
Opening Trade
4-18-2018
expiration date: May 18, 2018
Portfolio weighting: 10%
Number of Contracts = 40 contracts
I think we are only days, at the most weeks, away from the next crisis coming out of Washington. It can come for any of a dozen different reasons.
So I am going to buy some fire insurance here while it is on sale to protect my other long positions in technology and financial stocks.
Since April 1, the Volatility Index (VIX) has performed a swan drive from $26 to $15, a decline of 42.30%.
Until the next disaster comes, I expect the (VXX) to trade sideways from here, and not plumb new lows. These days, a premium is paid for downside protection.
So, I am buying the IPath S&P 500 VIX Short Term Futures ETN (VXX) May, 2018 $32-$35 in-the-money vertical bull call spread at $2.55 or best.
The year is playing out as I expected in my 2018 Annual Asset Class Review (click here for the link). Expect double the volatility with half the returns.
So far, so good.
This is a bet that the (VXX) will not trade below $35 at the May 18 expiration date in 22 trading days.
Don't pay more than $2.70 for this position or you'll be chasing.
If you don't do options buy the (VXX) outright for a trading pop.
Here are the specific trades you need to execute this position:
Buy 40 May 2018 (VXX) $32 calls at....................$8.70
Sell short 40 May 2018 (VXX) $35 calls at..........$$6.15
Net Cost:............................................................$2.55
Potential Profit: $3.00 - $2.55 = $0.45
(40 X 100 X $0.45) = $1,800 or 17.64% in 22 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.
