Higher Volatility on the Way! Long VXX
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A clear disparity has emerged between the level of the VIX at the beginning of the year and the level of the VIX currently. The VIX tends to be a great indicator of fear and capitulation (capitulation usually marking long-term or interim bottoms) and it seems to be clear that there is currently more complacency than panic at the moment.
Typically a rising VIX means a falling market and any prediction of a much higher VIX also means a much lower market. On Friday we lost 50 S&P points and the VIX moved only 1 point higher! What kind of move do we need to get this to budge? In essence, we could be in for a crash over the coming weeks.
I am playing this long volatility call by purchasing a SPY at-the-money straddle. On Friday, at the close, I purchased the SPY 261 Jan 9 2019 straddle for $10.40. That being said, I think the VXX can be bought with the following parameters:
Buy VXX on a break of the resistance line @ $41.85.
Target 1: $45.90
Target 2: $53
Stop: $38
Typically a rising VIX means a falling market and any prediction of a much higher VIX also means a much lower market. On Friday we lost 50 S&P points and the VIX moved only 1 point higher! What kind of move do we need to get this to budge? In essence, we could be in for a crash over the coming weeks.
I am playing this long volatility call by purchasing a SPY at-the-money straddle. On Friday, at the close, I purchased the SPY 261 Jan 9 2019 straddle for $10.40. That being said, I think the VXX can be bought with the following parameters:
Buy VXX on a break of the resistance line @ $41.85.
Target 1: $45.90
Target 2: $53
Stop: $38
Transaction en cours
Note
This trade is well through its first target. TIme to take most of it off. There's a chance we get a huge vol spike on the open that I would be a seller of.Trade fermée: cible de profit atteinte
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