Is this almost guaranteed money?? Looking at the chart it's a continous downtrend and if it does pop up here and there you can always roll the option contract out or double or triple down for a guaranteed return...and if it does go crazy high like.last.week just short the shares outright.
Continously selling calls on VXX....
- Thread starter S2007S
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Robert Morse
Sponsor
Do you have the equity required to cover that spike and the margin your broker will require? What if they could not reach you and bought you in between 80 and 90. It works until it doesn't.
So yes there are rare moments the vix spikes, but I'm not risking more than I can handle....and it's a known fact that volatility of that kind does NOT stay for more than a few days, maybe a week at most. Aside from that I'm not risking 22% or 37% 58% of my networth in this type of trade.....
If you do a sell call at $55 on the VXX and it spikes to $73 and you you take the assignment then you'll just wait a few weeks and that short position will be right back where you took the assignment, also I would short the stock on the spike and cost average in. Not only that but just roll out the option and by a week or 2 or 3 and by then it will be right back below the strike price you rolled out to. ....after every single vix spike in history of wallstreet, volatility 99.999% of the time comes right back in.
Robert Morse
Sponsor
Most definitely...I'll keep you posted.
I sold to open a 57 sell call for a credit of approximately $90.00 per contract earlier this week.
Tomorrow looking to open up another at 56 expiring on 8/23 for a credit of approximately $1.00 per contract.
Volatility can stay high for a lot longer than your bankroll can allow. Often you'll profit, but when you don't you'll get hit bad. Also, you suffer backwardation at high levels, so the times it sits up there longer, the more money you'll bleed.
I agree most often it works, but when it doesn't it's not gonna feel good.
I agree most often it works, but when it doesn't it's not gonna feel good.
you are here for a long time so i think you are not an novice. uncapped risk trade for certain asset class is a very bad idea.
statistics is what it is, but once hit, you will blow up your account. in your example once you take the assignment at 73, it will take years for the vix to go above 73 again. you will be sitting on a 7300-90 cost basis and it can go as low as 13, 6k in red.
vxx is the second derivative of vix so it is time decay more than vix, and it seems that you don't have enough money to trade vix futures or fops, those are for big boys.
if you want to pick pennies, ok, do a credit spread.