July 7, 2015 - MDT

While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.

The VIX today has peaked at 19.20 and sold off and is around 17.42 as I write this.

As a result, the S & P 500 hit a low today of 2,044.02 and has rallied back to around the 2,063 level.

If this level can hold, it will help to confirm that a bottom is perhaps in.

As I have mentioned in the daily updates, I would like to
see the VIX get to around the $22 area, but I am not
certain it will.

It could spike on a final flush out.

As a result, I am going to suggest a put position on the VXX.

While the standard allocation is 2% of a $100,000 portfolio,
I am only going to suggest you scale in with a .5% allocation.

This way, if the VIX does move higher, we can add to the
position.

I also want to buy a little time with this position.

So, my suggestion today is to Buy to Open the August 7th-$20.50
put on the VXX.

The August 7th-$20.50 puts are quoted at $1.76 to $1.86.

Assuming you can get a fill at the midpoint, which is $1.83, a
.5% allocation would mean you would initiate this position
with a 3 lot.

As I said before, if it does continue up, I plan to add to this
position.

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.