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Full Time Profits, October 23rd – VXX

October 23, 2018 By Steven Place

Markets finally got a washout this morning. The big gap down is what I thought should have happened last week, but buyers kept showing up. We’re now seeing signs of capitulation in the market.

The yellow line, at 2700, is the open for the year. It also coincides with support from back in June.

Whether or not this is *the* bottom remains to be seen. Enough technical damage has been done that it’s now a lot simpler to short stocks, but we need to wait for the first very large squeeze higher.

It may not look like it, but this is constructive. We’re seeing a retest of the lows on a gap down, with the VIX and VVIX making a lower high.

We have plenty of risk on in names that are well underwater, so I don’t want to aggressively add more positions until those names bounce and we either scale out or roll out to December options.

Today, we’ll focus on just one trade.

Trade #1: VXX

This trade has some moving parts underneath the surface.

The VIX is not making a huge spike into this gap lower. If and when volatility futures normalize, I’m expecting VXX to fade back to the low 30’s.

Trade Setup

Expected Price: 37.37

Sell to Open VXX Nov 44/47 Call Spread

Tier 1: Enter at 0.40, Exit at 0.05

Tier 2: Enter at 0.60, Exit at 0.20

Tier 3: Enter at 0.80, Exit at 0.40

Disclaimer

U.S. GOVERNMENT REQUIRED DISCLAIMER – COMMODITY FUTURES TRADING COMMISSION. FUTURES AND OPTIONS TRADING HAS LARGE POTENTIAL REWARDS, BUT ALSO LARGE POTENTIAL RISK. YOU MUST BE AWARE OF THE RISKS AND BE WILLING TO ACCEPT THEM IN ORDER TO INVEST IN THE FUTURES AND OPTIONS MARKETS. DON’T TRADE WITH MONEY YOU CAN’T AFFORD TO LOSE. THIS WEBSITE IS NEITHER A SOLICITATION NOR AN OFFER TO BUY/SELL FUTURES OR OPTIONS. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED ON THIS WEBSITE. THE PAST PERFORMANCE OF ANY TRADING SYSTEM OR METHODOLOGY IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY, SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN

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