As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.
Trade Alert - (VXX)- BUY
Buy the iPath S&P 500 Short Term Futures ETN (VXX) September, 2016 $30-$33 in-the-money vertical bull call spread at $2.45 or best
?Opening Trade
8-26-2016
expiration date: September 16, 2016
Portfolio weighting: 10%
Number of Contracts = 41 contracts
Janet Yellen says that ?the case for a rate hike has strengthened.? The S&P 500 rocketed, when it should be cratering.
So I am going to stick my toe in the water here with the Volatility Index (VIX) rarely trading down here at $12 and buy the iPath S&P 500 Short Term Futures ETN (VXX) September, 2016 $30-$33 in-the-money vertical bull call spread.
You can pay up to $2.60 for the spread and it still makes sense. If you can?t get it at the right price, walk away.
This is a bet that the (VXX) won?t trade below the $33 level by the September 16 expiration date in 14 trading days, or down 7.79% from here (remember, on Labor day the market is closed, so you get the extra time decay.).
What my former Berkeley economics professor has done is set the stage for another three weeks of tedious, boring, sideways market action into the Fed?s September 20-21 Open Market Committee meeting to see if she actually does it.
Worst case, the (VIX) continues to bounce allow this level. Best case, it gently rises into the meeting. Either one is a ?win? for this position.
If you can?t do the options trade, then buy the (VXX) outright.
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 on how to execute an options spread, please watch my training video on ?How to Execute a Bull Call Spread? by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/. You must be logged into your account to view the video.
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 on expiration months farther out.
Here are the specific trades you need to execute this position:
Buy 41 September, 2016 (VXX) $30 calls at????.?.??$6.00
Sell short 41 September, 2016 (VXX) $33 calls at.????..$3.55
Net Cost:???????????????????........$2.45
Potential Profit: $3.00 - $2.45 = $0.55
(41 X 100 X $0.55) = $2,255 or 22.44% in 14 trading days
