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January 28, 2014

$VXX Weekly Trade

  • Strategy: Bear Call spread
  • Underlying: VXX
  • Trade: SELL TO OPEN VERTICAL VXX 100 FEB 14 52/57 CALL @.38 LMT
  • Trade Price: .38¢ credit per spread
  • Margin: $4.62 per spread
  • Return on Risk: 8.22%
  • DTE: 24
Risk Profile:


Comments:  VIX spiked from 13 to 19 since last week and now it's come down to 16 level. VXX is a product of VIX that goes up when short term volatility is higher than longer dated VIX contracts. Volatility had a big move up as investors panicked and bid up premium levels. This may be a decent opportunity to fade this move in VXX. Our goal will be to get full credit and if P/L goes -1.5X initial credit (.38 X 1.5 = .57 loss) we'll use that as our potential stop out level.