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) STOP LOSS
SELL the IPath S&P 500 VIX Short Term Futures ETN (VXX)January, 2018 $60 calls at $1.50 or best
expiration date: January 19, 2018
Portfolio weighting: 5%
Number of Contracts = 19 contracts
With the last of my “RISK ON” positions gone, there is no reason to continue with my hedge with my long volatility position.
In a normal market, a periodic market would enable to get out of my hedge at cost.
However, we have anything BUT a normal market.
Since I added this position on September 29 the Volatility Index (VIX) has seen its most dramatic sell off in history.
The (VXX) got crushed, plunging some 42.10% from its August high.
Traders have sat in front of their screens, disbelieving and aghast.
So the hedge that I thought might cost us nothing ended up knocking 2.00% off of my performance.
This one position ate up most of my October profit, despite the fact that I got almost everything in the market right.
I am therefore throwing in the towel and selling my position in the IPath S&P 500 VIX Short Term Futures ETN (VXX) January, 2018 $60 calls.
If you can’t get my price then cut your limit by a penny at a time until it gets done.
This move takes me to a very rare 100% cash position.
There are absolutely NO low risk/high return trades out there right now. Not a “sweet spot” is to be had anywhere.
But then up 51.80% on the year is not a bad place to be clueless.
This was a bet that the (VXX) would rise sometime in the next three months.
It was also a bet that this will happen quickly before time decay eats up the value of our position.
This position was a hedge, or insurance policy, against our other substantial long positions.
Here are the specific trades you need to execute this position:
Sell 19 X January, 2018 (VXX) $60.00 calls at……………………….$1.50
$2.57 cost – $1.50 proceeds = $1.07 loss
Loss: ($100 X 19 X $1.07) = $2,033.
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.
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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.