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Home › Forums › Swing Trades › Fade the VXX
We had a volatility event last week which caused a bunch of investors to panic and pick up protection via puts. That lead to a massive move in the VIX, and by proxy the VXX.
I think it’s a bit overdone, and we can fade the VXX here.
Buy Feb/Mar 40 Put Calendar @ 1.08
If we see the VXX get into the high 40s I would look to add another round of put calendars to the trade.
Big gap up in the VXX. Due to VX futures backwardation and the actual VIX continuting to rip.
I’m adding a 2nd round of put calendars here to get us closer to theta positive.
Buy VXX Feb/Mar 45 put calendar @ 1.40 or lower
Here is the risk now:
After catching a little heat to the upside, VXX settled down nicely into our range and is nearing max profit.
You can do a couple things here. You can buy back the short puts and hold onto the long puts, or you can roll it into another spread, and so on.
I think the prudent bet here is to just close it out and wait for another spike in the VXX to get involved.