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VXX

Short volatility play in VXXWith the spike in volatility and knowing that next week might be a slow one I did a short play on volatility. Sold the 8 days to expiration 14 Call on VXX for $0.68 per contract. This is a naked trade and it is a high probability trade, but it can be very risky if volatility explodes. If that happens we will have to defend it, but most likely by the end of next week we will be making a nice profit, since volatility usually don't stay high for that long.
CBOE:VXXShort
by AlexanderGotay
2
Neutral/Bullish trade on VXXWe are at the lows and this trade is a neutral to bullish strategy. By selling the 18/19 Credit spread we make money if VXX continues to go down, however by selling the At the money Put we collect enough premium so that we have no risk to the upside in case volatility decides to explode. To be more efficient with my capital I am also buying the 13 Put improving my margin requirements by 76% percent and only losing 4% of the credit received. I collected 1.09 per contract with a 70% chance to close at 50%
CBOE:VXX
by AlexanderGotay
SP500, SPY - The End is nearSP500 Daily Chart Did you like my title? "The end is near". BUT NOT YET. I'll explain. First on this daily chart I would like to point out that we dropped a little bit over the last couple weeks. The hidden bearish divergence on the RSI below played out. But as you can also see, we have a larger hidden bullish divergence that has formed. Look at the last hidden bullish divergence and you can see how we made new highs shortly after. Well this divergence is a little bigger. So I do think we will be ramping up hear very soon and I do think we can reach somewhere around the 2500 range (to complete this larger 1st wave) before the larger corrective 2nd wave begins. Yes, only wave 2, not the END. That comes later. So lets look at some possible key events that could trigger the wave 2 correction. (and the correction should be a decent 10% drop). 1st, I do not think the FED will raise rates in May. Even if the market is up to 2500 at that point. The reason being is that I think the fear of the French election will keep the FED at bay. So there is a 2 round vote in France. The first one is April 23rd and the second is May 7th. I think the Brexit and Trump affect will win the day in France and Le Pen will be victorious. But the media wont say that. So that could have a similar affect as Brexit did. And thereby bring a little shock to the Markets. But that wont last long and we will start a hefty larger wave 3 of wave 5. I will post my Monthly or weekly chart next to show you what I see is happening. This market has structure and it is playing out like I see it.
TVC:SPXLong
by SalN
3
SP500 Rate Hike Feb 1st ?? I do believe soI have been giving it some thought and I have a feeling that there will be a rate hike on February 1st and I will list my reasons. #1) We are currently in the micro wave 5 which wont last until the March 14th Fed meeting. 2) The CME group has a FED Watch tool that gives a percentage for the likelihood for a rate hike for this year.....and for Feb 1st we are at 96%. #3) the RSI is showing a good sized bearish divergence that you can see below. #4) we have not had a DCL low since November 4th and we are about due. #5) the market barely took a hit at the last rate hike and now the DOW just broke 20,000 which usually lets the FED know that the market can handle a rate hike. So then, if they do hike what could be expected for a drop in the SP500? If my wave count is correct and we are currently finishing wave 3...and this correction would be a wave 4, then we shouldn't be able to drop below the bold black line with the blue arrow which is 2194 max. But a more likely target for me would be the 100 DMA which should be approximately at 2210 - 2215 range by that time. Last little tid bit> what looks reasonable for a target price by February 1st. Well, you will know on that day or the day before but I am thinking that we push up to just over 2300, maybe up to 2310. Which we are almost there. GL
TVC:SPX
by SalN
THE WEEK AHEAD: SLIM PICKINGS FOR THE PREMIUM SELLERWith VIX at sub-12 levels, broad market implied volatility is low here, and a basic screen run for high implied volatility rank/high implied volatility yields few high quality results. Here's what I'm looking at ... . SPY et al (Broad Market) The first expiry with greater than 15% implied volatility for SPY is in the June expiry. The most I like to go out with these is around 90 DTE, so no play there unless you like to watch paint dry. (The theta decay of a June setup would be painful to watch). Earnings The only earnings play next week with >70 implied vol rank/>50 implied vol is $NFLX, which announces on 1/18 after market close. I'll probably play that with my standard volatility contraction setup, which will either be an iron condor or short strangle, although I could also see just playing it with a 20-delta short put (bullish assumption). Non-Earnings The only playable individual underlying without earnings on the horizon appears to be P, but the only worthwhile setup due to the price of the underlying would be an ATM short straddle, 45 DTE. It looks like that would pay 2.00 or so at the door; shooting for 25% max profit would yield about $50 per contract. Exchange Traded Funds There are literally no sector exchange traded funds out there that meet my criteria for a premium selling play (>70% implied vol rank; >35% implied volatility), unless you count $GDXJ (junior gold miners) and $UNG (the natty gas proxy). With $GDXJ, I'm contemplating the simplest play out there -- a naked short put (bullish assumption). Unfortunately, however, I missed the "meat of the dip," so am hesitant to pull the trigger here against a backdrop of Fed tightening and therefore Greenback strength going forward. I'll post the $NFLX, $P, and $GDXJ plays if I decide to play ... . VIX/VIX Derivatives I continue to keep an eye on VIX "front month" futures. The Feb expiry is currently trading at 14.20-ish; the March, at 15.70. The Feb is a bit low for my tastes on which to base a VIX term structure trade; I already have a March setup on; and VIX is too low for a "Contango Drift" trade in one of the derivatives. My original intention with UVXY was just to slap on an ATM short call vert post split, but the options chains have been somewhat slow to populate for the standard contracts. You will see the chain with both 20's (the nonstandard contract for options that were on when the split occurred) and 100s (the standard contract). Some care needs to be taken not to accidentally enter a trade in a non-standard or a combo of a standard and a non-standard ... .
TVC:VIX
by NaughtyPines
sp500 One more Bullish week? 2298SP500 Daily Chart It appears that we are in our micro wave 5 move to complete this bigger wave 3. That's how I see it anyways. And I think we can make it to almost 2300 before the DCL rollover. It just never seems to be able to make it all the way through those milestones marks the first time. If you zoom out you will see my little cycle indicators and if you zoom out further you can see the larger cycle indicators. But these seems to shift overs the years. But it appears to be about right for the present. I posted the RSI and you can see that even if we do make it to 2300 range, we are likely to have a bearish divergence. What is really scary is if you jump to the monthly charts, you can see a huge bearish divergence on the RSI from back in early 2015 to the present. When that will play out is a guess but I still think we climb to 3000 in late 2019 before the crash. And I think the November 2019 Presidential Election will be the Catalyst. That's is just my crazy long shot opinion. So looking for at least one more up week for the Markets. Dow will break 20,000 this time. Its ready, I can feel it.
TVC:SPXLong
by SalN
SP500 Vix start of 2017Daily chart for SP500 So I saw someone else's idea about wave count with the SP500 and he may be correct. I was always wondering about the correction we had that ended in November. As you can see it dipped well below the August 15th peak. That is not suppose to happen if that was a Wave 4 corrective move. So another person had an idea that the end of the Brexit dip was nothing but the end of a very large correction from the previous large long rally. So I moved the wave count as it is now shown on the chart in blue. That would mean that we are just starting wave 4 correction which shouldn't be as deep (percentage) as wave 2 was. So that would bring this correction to most likely the purple line channel and at best we should not break the bold black horizontal line. A break of that black line would once again nullify this wave count. Not to mention, we are only due for a short term cycle correction "DCL" and not due for a ICL for a couple months. That being said, I am going to guess that we have the next rate hike on May 2nd which should help trigger the ICL to start. I am currently in TVIX right now for a small gain. I do not see this dip lasting much longer this week. I do not think I will revisit the VIX until we are due for a bigger better drop in the SP500 DCL in March.
TVC:SPX
by SalN
WHAT I'M LOOKING AT FOR EARLY 2017: VIX/VIX DERIVATIVE PLAYSWith Dough transitioning over to TastyWorks (it's basically Dough on steroids), I'm looking to wind up positions I've got on here over the next several weeks so that I can transition over to TastyWorks, which will not interface with TDA accounts. While I can naturally use ThinkOrSwim (ToS), it just doesn't have the features of Dough that I've come to know and love. Call it laziness, lack of "platform fluency," or a geezerly unwillingness to change, I'm not willing to "do without my Dough." My original intention was to wind up everything in time for the TastyWorks roll out (Jan 3rd), but I figured I would just "carry on" until TW was firmly up and running, the mad rush at the TW doors had ebbed, and the inevitable glitches or kinks had been worked out. It is, after all "a new broker," and shit can happen ... . Generally, I prefer that shit happen to someone else. Okay, call me "lazy" and selfish. In any event, being somewhat hobbled by the unavailability of Dough IVR/IV screeners here (I have other tools to screen for those, but they're extra work), my focus is going to pretty much be solely on short volatility product plays here over the short run, with the emphasis being on VIX "Term Structure" plays and "Contango Drift" plays in VXX and SVXY (UVXY is getting awfully close to reverse split territory, and I don't want to be in the middle of an options play when that happens; they're "messy"). Unfortunately, these are some of the most boring plays out there. For "Contango Drift" plays, you're basically sitting on your hands a lot, waiting for a pop in VIX, preferably to >20, and you can be waiting literally weeks for those to occur. With "Term Structure" trades, you put them on and wait sweatily for the VIX futures price to converge on spot, ideally below your short call strike before your options expire. If they don't, you look at rolling your spreads out for duration, which means (you guessed it), additional waiting for volatility to "come in." I'll look at posting a "Contango Drift" example here, since I've already got some "Term Structure" examples out there to look at ... .
CBOE:VXX
by NaughtyPines
1
EXAMPLE: VXX 30 DTE X/X+3 ATM SHORT CALL VERT (CONTANGO DRIFT)As previously noted in other posts, the short volatility product plays I like most are "Term Structure" plays in VIX and "Contango Drift" plays in VIX derivatives, with the preference being toward the latter play, since you're getting in on a pop in VIX and then taking advantage of "Contango Drift" in the derivatives to the downside (in UVXY, VXX; SVXY is an inverse, so you're looking to take advantage of "Inverse Contango Drift" to the upside). Here's what I'm looking to get into a "Contango Drift" play: 1. A VIX pop to 20 or greater. For various reasons which I've elucidated before, I use the VIX price as a guide to enter these plays and not the price of the derivative itself. That being said, some traders use a 2 SD Bollinger Band as a rough guide as to when they would want to consider an entry. I really can't poo-pah that, since the last two BB touches (indicated by green arrows) would have been winners. 2. An ATM Setup That Pays at Least 1/3rd the Width of the Spread. I generally go with an ATM credit spread for which I get at least 1/3rd the width of the spread in credit (i.e., for a three-wide, I look to get 1.00 ($100) in credit per contract). This may require some "putzing" with the spread, moving it up or down in relation to current price. 3. Roll Out for Credit/Duration If Price Has Not Broken Short Call Strike by Expiry. No one likes to roll out for duration, since it usually means that the setup is "broken" and you'll be booking a realized loss in the short term if you do that. However, with contangoized setups, time/duration is on your side; the longer you hold the setup, the more likely it is that contango will work its fairly inevitable magic on it. 4. Go Small, Since "Shit Happens." Unfortunately, markets don't always "behave" the way we'd like them to. VIX can "elevate" for periods of time that are longer than we'd all like and send the derivatives into temporary periods of backwardation that aren't favorable to these setups; they'll be underwater and you'll be holding them longer than you'd like. Going small allows you to ride out periods of backwardation, as well as keep buying power free for getting into similar setups "higher up the ladder" if that sort of thing happens. If we do get a VIX pop to greater than 20, I'll post an actual trade setup. In the mean time, hand sitting ... .
CBOE:VXX
by NaughtyPines