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) ??? TAKE PROFITS
SELL the IPath S&P 500 VIX Short Term Futures ETN ??(VXX) March, 2018 $60-$65 in-the-money vertical bear put spread at $4.65 or best
Closing Trade
2-14-2018
expiration date: March 16, 2018
Portfolio weighting: 10%
Number of Contracts = 26 contracts
This has been a heck of a home run of a trade, with the (VXX) cratering by 22.72% and the (VIX) plunging by an incredible 50.05% in only four trading days.
Better to cash in here on the windfall so I can resell volatility on the next big spike.
I am therefor selling the IPath S&P 500 VIX Short Term Futures ETN?? (VXX) March, 2018 $60-$65 in-the-money vertical bear put spread at $4.65 or best
This was a bet that the (VXX) would not trade above $60 at the March 16 expiration date in 30 trading days. That was an eye popping 16.39% above the then current level, and 9.09% higher than the nine-year Tuesday morning high at $55.
It seems like a no brainer now, but at the time it seemed an utterly insane thing to do.
You only needed volatility to take a brief rest to earn significant money on this trade, and I believe we were approaching a point of utter exhaustion.
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.
Here are the specific trades you need to exit this position:
Sell 26 March 2018 (VXX) $65 puts at??????.???????????????..$23.40
Buy to cover short 26 March 2018 (VXX) $60 puts at?????????.$18.75
Net Proceeds:??????????????????????????????.????????????..??????.???.....$4.65
Profit: $4.65 - $3.90 = $0.75
(26 X 100 X $0.75) = $1,950 or 19.23% in 4 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.
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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.
