The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘VXX’

Position Update – VXX

Posted by mounddweller on July 9, 2012

Fellow Traders,

My sad saga with VXX continues.  Today, I decided to roll out and down my JUL $21 puts.  I had to go all the way out to DEC to obtain a net credit at the $20 strike.  Even after rolling down I’m still $6 ITM with a lot of ground to recover.  Here’s the specific trade I executed today:

BTC 5 JUL $21 puts at $6.95

STO 5 DEC $20 puts at $7.55.

As you can see I got a net credit of $0.60/share but had to extend almost 5 1/2 months to get it.  Thus far, since entering this trade back at the end of February I have collected $1,604 in premiums and have had an average capital requirement of $10,500.  Thus, my ROIC (assuming I’ll eventually dig myself out of this hole) is over 15%.

To break-even I’ll need to BTC my existing short puts at $3.21.  Instead of waiting passively for that to occur I’m going to alter my strategy.  Going forward I am going to look for opportunities to trade in and out of the position based on the stochastics.  Right now the slow stochastic is below 10 and the fast stochastic is just above 20.  These are very bearish levels and usually indicate a turn around is imminent.  My objective will be to BTC my new DEC short puts as the stochastic increases to 80.  I’ll then sell another round once the stochastic drops back down to 20.  I’ll keep repeating this process until I’m able to dig myself out of the hole I’m in.

Then, I WILL NEVER AGAIN trade options on ETNs.  I have been burned twice now, first it was in UNG and now again in VXX.  I will not attempt a three-peat.

Regards,

Troy

 

 

Advertisements

Posted in Portfolio Updates | Tagged: , | 3 Comments »

Update – VXX

Posted by mounddweller on May 20, 2012

Fellow Traders,

I want to give you an update on my naked put trade on VXX.  I initiated this trade back on 2/29, selling the MAR $22 puts when VXX was over $24.  Since  then VXX has dropped to as low as $15.84.  I’ve continued to roll my puts, first to APR, then MAY.  Last week, although VXX has recovered substantially, it still looked like it was going to stay under $22.  Consequently, I rolled the MAY $22 puts out and down to the JUL $21 for a net credit of $311.05.  As it turned out I rolled a couple of days early.  VXX closed Friday at $22.36.  However, since I don’t posess the ability to see into the future, I’m still happy with my trade.  In just under three months I’ve taken in $1318.17 in premiums against my capital requirement of $11,000.

Regards,

Troy

Posted in Portfolio Updates | Tagged: , | Leave a Comment »

Update – VXX

Posted by mounddweller on April 20, 2012

Fellow Traders,

Mr. Market is still refusing to cooperate with regard to my VXX trade.  As you’ll recall back on 2/29 I sold 5 MAR $22 puts for $0.50.  VXX at the time was at around $24.75.  Since then the VIX and VXX have continued to fall.  Consequently, I have been rolling out my puts, each time for a net credit.

Today, I bought to close my 5 APR $22 puts for $4.40 and sold 5 MAY $22 puts for $4.95, a net credit of $0.55.

So today here’s where I stand in this trade.  My plan is to continue to roll this out until VXX recovers back to $22.  Thus far I have a total net credit (after commissions) of $1,007.12.  That’s a 9.56% ROIC.

Regards,

Troy

 

Posted in Portfolio Updates | Tagged: , | Leave a Comment »

Weekly NP Strategy – 04/13 Expiration

Posted by mounddweller on April 5, 2012

Fellow Traders,

My apologies for being out of touch for the past couple of weeks.  I’ve been very busy at work.  I did finally have time this evening to run the Weekly NP Strategy scan.  This week the scan returned 37 trade opportunities.  While I must admit I didn’t have time to do much in the way of due-diligence, one did catch my eye.

Once again it was a trade in VXX.  This time I like the $16 strike.  VXX has been rising for the past several days after bottoming a couple weeks ago at $15.57.  This $16 strike closed today at $0.13 bid.

This trade is not without significant risk.  Proceed with open eyes.

The other 36 trades can be found here: http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/.

Regards,

Troy

 

 

 

Posted in Uncategorized | Tagged: , | Leave a Comment »

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;-)

Regards,

Troy

Posted in Portfolio Updates | Tagged: , | Leave a Comment »

Update – VXX

Posted by mounddweller on March 18, 2012

Fellow Traders,

I want to update you on my VXX trade.  As you’ll recall I entered this position back on February 29th, selling 5 VXX MAR naked puts at a strike price of $22.  The premium I received was $0.50/share.

At the time I placed the trade VXX was trading around $24.52.  The recent low had been $23.72.  My strike price at $22 seemed reasonably safe.  Alas, the best laid plans often don’t work out.   While I thought the market was ripe for a correction which would cause VXX to rise just the opposite happened.  The market has continued to move higher sending the VIX and VXX lower.  Friday, VXX closed at $21.56.

Rather than have VXX put to me I elected to roll out my position.  However, instead of rolling my puts out to the normal monthly APR expiration I chose to roll them to the next available weekly expiration on Friday, March 23rd.    With just 8 days to expiration I was able to roll out with a net credit of $0.62.

Net of commissions my total credit thus far in this trade is $535.02.   If VXX closes above $22 on Friday I will have earned a 4.86% ROIC with a holding period of only 24 days.  If VXX remains below $22 next week I will roll out another week.  Sooner or later the  market will have a down day or two and that will be my opportunity to close the trade at a profit.

Regards,

Troy

Posted in Portfolio Updates | Tagged: , , | 8 Comments »

Weekly NP Strategy – MAR 9 Exp.

Posted by mounddweller on March 1, 2012

Fellow Traders,

My apologies, It’s been hit or miss the past few weeks with me posting the Weekly NP Strategy selections.  But, this week, I’m back with another round of trades for you to consider.

It was pretty slim pickin’s this week.  Only 33 trades met our 5% DSP and 0.5% ROIC selection criteria.  Of those only 2 caught my eye as good possibilities.

First up is Abercrombie & Fitch (ANF).  This isn’t the first time it has shown up on our Weekly NP Strategy screen.  This week its the $45 strike price we’re interested in.  The stock closed today at $47.33 and the $45 put has a bid premium of $0.33.  This gives us a 0.73% ROIC with 5.62% DSP.  ANF has a 52-wk low of $40.25 which it hit exactly one month ago.  Looking at the 1-yr chart you’ll see ANF has solid support at $45.  It bounced off this level several times over the past few months before finally succumbing to the repeated pressure in early February.

My second selection this week is a trade very similar to the one I made earlier this week.  It involves the ETN, VXX.  You may recall VXX tracks the performance of the volatility index VIX.  Earlier this week I placed a trade selling the regular MAR monthly expiration puts at the $22 strike.  The weeklies at the same strike also look like a good trade.  The MAR 9 $22 put has a bid premium of $0.22.  The ETN closed today at $24.14 giving us a 1.00% ROIC with 9.78% DSP.  While VXX has a 52-wk low of $19.88, it hasn’t closed below $23 in several months.

Well, there you have it.  Just two trades this week, but both I think are worthy of your time and further due diligence.

Regards,

Troy

PS.  Oops, almost forgot.  If you want to see the other 31 trades you can find them here:

http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/

 

Posted in Weekly NP Strategy | Tagged: , , | 2 Comments »

New NP Trade – VXX

Posted by mounddweller on February 29, 2012

Fellow Traders,

I am sticking my big toe into the water and trading NPs on VXX.  The VIX is very low right now and a lot of market indicators are flashing overbought.  Thus, I think we could see increased volatility in the near future.  Increased volatility will drive both the VIX and its proxy VXX higher.  Now, in my opinion is a good time to sell puts on this ETN. Here’s the trade I just made:

Action Quantity                 Symbol                        Unit Price             Principal Amount

Sold           5          VXX 03/17/2012 22.00 P         $0.50                         $250.00

The most recent low for VXX is $23.67.  My strike price of $22 is well under this low.

Regards,

Troy

Posted in Troy's New Picks! | Tagged: , | Leave a Comment »