Here’s a trade idea from AllanTrends.
A crescendo of hype is taking over the financial markets. The next few trading days are likely to be completely held hostage to the resolution and/or outcome of the debt ceiling negotiations.
Looming in the early days of next week is the potential for a major market move, one way or another. If there is a breakthrough in the next few days, next week still can be striking in its reaction, providing a trading opportunity in a volatile, perhaps temporary new trend.
This is me, what I intend to do and not a recommendation for anyone else:
Neutral or non-directional strategies
Neutral strategies in options trading are employed when the options trader does not know whether the underlying stock price will rise or fall. Also known as non-directional strategies, they are so named because the potential to profit does not depend on whether the underlying stock price will go upwards or downwards. Rather, the correct neutral strategy to employ depends on the expected volatility of the underlying stock price.
My preferred vehicles for this strategy are the volatility indexes, VIX and VXX. With VXX at about 23, an example would buying equal dollar amounts of the August 23 calls and puts. I may or may not use that strategy myself.
I already own the December 22 VXX calls, expecting downside market volatility sometime in the next 5-6 months, no matter what happens this weekend. Nonetheless, I intend to put on an option strategy that covers both bullish and bearish outcomes over the next few days. By the end of today (Thursday), I will have put on an initial position which I may add to on Friday, pending any overnight news.
[At the moment, the Aug 23 calls and puts are little changed today.]
