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Archive for March 25th, 2012

Update – VXX

Posted by mounddweller on March 25, 2012

Fellow Traders,

On Friday I was unable to roll my 5 VXX MAR23 $22 puts out a week for a net credit.  Instead I had to roll out to the normal APR monthly $22 put for a net credit of $0.45.  I placed my trade before lunch and had to wait until just before 2 pm CT before it finally executed.  The bid price on the spread was $0.35 all day and it didn’t want to budge.  I had decided that if it hadn’t executed by the last half hour of trading I was going to cancel the trade, accept having VXX put to me at $22, and then write the APR $22 calls on Monday morning.  The APR $22 calls at the time were going for $0.46-$0.47.

However, as I said I was able to roll out to APR by BTC MAR23 $22 at $4.65 and STO APR $22 at $5.10.  Doing so now gives me a total net credit (after commissions) of $746.07 against my capital requirement of $11K.  Thus, if VXX recovers and finishes OTM by April close I wll have earned 6.8% in about 7 weeks.  If VXX doesn’t recover by APR expiration I’ll try rolling out to a May expiration.

I’m learning a lot in this trade.  Even in the 21st century the school of hard knocks remains an effective teacher;-)



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