I picked up this idea from Jeff Augen’s book, "Trading Realities: The Truth, the Lies and the Hype In-Between." Augen has written a fine series of books on trading options and I have bought and sampled from all of them. He notes the favorable risk/reward profile on buying VXX, which is a ETN attempting to track the short-term futures on the VIX, and selling at-the-money calls on it while the VIX is low. Augen notes that theoretically you could lower your cost basis in a year’s time to almost zero using this method every month. But it gets even more interesting using weekly options. I bought VXX ETN at $14.92 today and sold the $15 strike on the October 22 weekly options for $.58. That is about 3.8% profit if VXX does not move at all.
That is what I’m trying to average on a trade per month!
Let’s take a look at the one year chart on VXX:
You can see how low VXX has dropped. Unlike a stock you know this chart is not going to drop to zero. Volatility cannot disappear or go bankrupt. There will always be some level of volatility, so there is a limit to downside risk. The VIX, which is a measure of put buying, closed at 21.68 today, which is fairly low volatility. If you had to say which way volatility is moving right now, is it more likely to go up or down in the next month? I’m voting for up, since we have earnings season, elections and a rally that looks like it could roll over at any time. With a low VIX and higher expected volatility events, doesn’t it make sense to sell covered calls on volatility at least until the VIX clears 25.
I’m planning to sell the weekly at-the-money calls up to that point, which may only be one week if the market drops. I’m sure speculators could arrange more profitable trades, but I am looking for income and retirement investments, so I’m not getting greedy and buying calls or some other idea. I am considering selling at-the-money puts in my margin account. Let me know what you think of the idea. The risks I can foresee are poor tracking of the VIX by VXX and that volatility is driven into oblivion. But the VIX rarely drops below 15, which would be a 25%…
Cash and carry has become nothing more than standard operating procedure in politics and government, and it’s wrecking the republic. The whole system is rotten to the core, corrupted by big business and special interests from the seventh son to the seventh son.
Or daughter, as we learned these past few days when the news introduced us to Heather Bresch, CEO of a drug company called Mylan and daughter of Democratic US Sen. Joe Manchin III, who's also the fo...
Members of what was surely the Venezuelan regime’s secret police yesterday kidnapped opposition leader and 2008 Milton Friedman Prize winner Yon Goicoechea from his car after he left his home. Diosdado Cabello, the second most powerful person in the regime, publicly announced that the government had arrested Yon on the bogus claim that he was carrying explosives.
Yon advocates non-violence in the promotion of basic freedoms and democracy.In the video broadcast on national television, Cabello referred to the $500,000 Friedman Prize award that Yon received as evidence that Yon was some sor...
There is increasing evidence that Clinton Foundation related email traffic was specifically omitted from disclosures to the FBI. Recent emails received under various FOIA requests have uncovered numerous Clinton emails, related to the Clinton Foundation, that were "mysteriously" absent from the "30,000 work-related emails" that were previously turned over to the FBI. That omission obviously begs the question of how Hillary could possibly consider correspondence with the Clinton Foundation and/or its donors to be "personal". Certainly Me...
The US Dollar/Yen is facing a trio of potential support lines at this time with few people bullish the US$/Yen at Stocktwits. What happens at this potential support zone, could well impact the Risk On trade from now until year end.
CLICK ON CHART TO ENLARGE
The trend in the US$/Yen remains down for the past few months, as the YEN has been stronger than the US$. The US$/YEN remains inside of a steep falling channel over the past 10-months.
The bottom of this steep falling channel and two ot...
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Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer. One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."
Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.
Genetic components are the DNA sequences that are 'inherited.' Some of these genes are stronger than others in their expression (e.g., eye color). Yet, some genes turn on or off due to external factors (environmental), and it is und...
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at email@example.com with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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