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)- SELL
SELL the iPath S&P 500 VIX (VXX) May, 2017 $13.00-$13.50 in-the-money vertical bull call spread at $0.41 or best
Closing Trade - NOT FOR NEW SUBSCRIBERS
expiration date: May 19, 2017
Portfolio weighting: 10%
Number of Contracts = 263 contracts
With only three days left to expiration, there is not enough time for this trade to go right, if it goes horribly wrong first.
So, I am stopping out of my iPath S&P 500 VIX (VXX) May, 2017 $13.00-$13.50 in-the-money vertical bull call spread at 0.41, or as close to cost as I can get.
Prudent risk control demands it.
Since we put on this trade last week, The VXX has gone a full half point against us, or some 5%. All the money was made back through time decay of the options.
If the VXX falls any more, the P&L will move sharply against us.
Therefore, I am out.
Too bad we didnt sell last week, when this position traded as high as $0.48. But I am not used to selling close to 23-year lows.
This is one of the most difficult markets I have ever seen.
The bad news arrived as I predicted, in torrents, by the boatload, and daily.
But the market correction didnt.
It is clearly a classic case where the market can remain irrational longer than you can remain liquid.
To get out for free is a gift.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain about how to execute this options spread, please watch my training video How to Execute a Vertical Bull Call Spread.
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.
Dont execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile with only three days to expiration.
Please keep in mind these are ballpark prices at best. After the text alerts go out, prices can be all over the map. There is no telling how much the market will have moved by the time you get this email.
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Here Are the Specific Trades You Need to Execute This Position:
Sell 263 May, 2017 VXX $13.00 calls at . . $0.64
Buy to cover short 263 May, 2017 VXX $13.50 calls at
Net Proceeds: ......$0.41
Profit: $0.41 - $0.41 = $0.00
(263 X 100 X $0.00) = $0 or 0%.