Trade is working out great. Got about 2 days left to expiration– that means if something stupid happens and the VIX spikes you can lose all your profits. We’re at at tricky spot where you have the potential to milk the trade a little more but with a heightened amount of risk.
There’s a few things you can do here.
1. Close out the trade.
2. Trail a stop — if the VXX starts to run higher then you bail.
3. Hedge– I like buying the Aug 31 call to reduce delta risk.
Any of these three will work, just make sure you don’t lose out on hard earned gains.
Also: in hindsight, maybe butterflies would’ve been a better choice as the IV did start to come out of the options.
