It’s come to my attention that the VXX backspread entry price from the ‘How to Profit from September Volatility Spikes (And Get Paid Waiting For Them)’ article last week was incorrect. We recorded this as a $180 credit; which has now turned into a $250 debit (i.e. a fantastic result: we get paid to ‘buy’ back our credit position). I would love this be true but don’t believe it; I therefore have decided I’ve therefore decided that the original pricing was incorrect and we shouldn’t recognise the ‘profit’ from this spread.
The original trade, tweaked to widen the spread to 12/16, is still valid but obviously less attractive: it would take a much bigger spike in VXX for it to become profitable.
I will be writing an article soon on a different way to trade VXX. But in the meantime my apologies; I will be publishing screenshots of all pricing in future to avoid this happening again.
Chris
Chris,
I admire your integrity, transparency, and honesty to post your correction publicly.
Mitch
Thanks.
Chris
Can you let us know what you think is a good VXX trade before Fed speaks. How about a backspread on vxx for 11/12 1:2 back spread. Also please explain what you meant by trading AAPL straddle from thursday 10.30 to friday 3.30 pm. How would you trade it.
A 11/12 or even 10/11 could work. The key is to ensure you’re not in the trade when the dip between the two sets of options occurs. When that happens depends on the all strikes, the stock price at the time and the expiry date of the options. Therefore you’ll have to check which one is best at the time.
As for your other question I’m not sure I understand. I mentioned in one of my articles trading a long butterfly during those time frames. Is this what you’re referring to? I plan to do a longer article about this sometime…
Chris
Hi Chris,
Wanted to see how we can use butterflies to trade weekly AAPL option. As per you there is a decay in option and it can be a good strategy please give an example. Would you go long a butterfly and what would be your exit.
Thanks
Bill
Bill,
Have just posted a reply to you on this on the seekingalpha article comment you posted…
Chris