Continously selling calls on VXX....

mervyn said:
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.
More...



So I'm referring to VXX, the volatility index fund ETF.... its tied to the vix, however its the underlying ETF I'm referring to and not the futures contracts. So when i mentioned 73 I mean the stock price of the ETF VXX, being at that level while I'm short say at 55 on the assignment. I wouldn't mind since the ETF never stays high for long. Only thing that might occur is that VXX becomes a hard to borrow and the rate skyrockets but on VXX I don't think that would be such a high probability.
 
S2007S said:
So I'm referring to VXX, the volatility index fund ETF.... its tied to the vix, however its the underlying ETF I'm referring to and not the futures contracts. So when i mentioned 73 I mean the stock price of the ETF VXX, being at that level while I'm short say at 55 on the assignment. I wouldn't mind since the ETF never stays high for long. Only thing that might occur is that VXX becomes a hard to borrow and the rate skyrockets but on VXX I don't think that would be such a high probability.
More...

it is high probability to be assigned, even miles away from expiration date and price, vix trade is one of those. i trade vix options regularly.
 
S2007S said:
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.
More...

Yes it's guaranteed money until it's not when the market takes a downturn and when it takes a downturn, it can be a drastic downturn and it can wipe out all the premiums that you've earned from selling calls. So when you sell calls, it's better you do it with a spread and not a naked call cuz when the call prices go up, the sky is the limit and not even and you can be caught in a nasty short squeeze. There have been people who have lost millions (or billions in this recent downturn) when continuing to short VXX: https://www.reuters.com/markets/us/...olatility-short-after-stocks-rout-2024-08-07/

Consider yourself warned.
 
TheDawn said:
Yes it's guaranteed money until it's not when the market takes a downturn and when it takes a downturn, it can be a drastic downturn and it can wipe out all the premiums that you've earned from selling calls. So when you sell calls, it's better you do it with a spread and not a naked call cuz when the call prices go up, the sky is the limit and not even and you can be caught in a nasty short squeeze. There have been people who have lost millions (or billions in this recent downturn) when continuing to short VXX: https://www.reuters.com/markets/us/...olatility-short-after-stocks-rout-2024-08-07/

Consider yourself warned.
More...



I'm not trading with gigantic risk. And if you think about it even if I do a sell call on vxx say at 55 and it skyrockets to 75 and I get the assignment at 55 I can just wait it out for volatility to collapse and the vxx to drop back to earth. It happens all the time. Vxx never keeps going up. It's had nothing but a downtrend after each run higher.
 
S2007S said:
I'm not trading with gigantic risk. And if you think about it even if I do a sell call on vxx say at 55 and it skyrockets to 75 and I get the assignment at 55 I can just wait it out for volatility to collapse and the vxx to drop back to earth. It happens all the time. Vxx never keeps going up. It's had nothing but a downtrend after each run higher.
More...

but you would own it at 55 and became a long trade, how long would it take to get out a collapsing position? almost never. if you really want to short, then short vxx directly. you trade options on vix options etn, aka vxx, that is for the unsophisticated.
 
mervyn said:
any debit trades on an index is money losing game, no one is certain about the timing.
More...

I buy puts all the time on VXX and then diagonalize them works for me and I don't risk blowing up my account
 
You must log in or register to reply here.
Back
Top