OptionsHouse

Options Trading News

November 12, 2013  Tue 9:11 AM CT

VXX: SEE CHART GET CHAIN FIND STRATEGIES
A large and long-term bearish trade is targeting the iPath S&P 500 VIX Short-Term Futures Note.

optionMONSTER systems detected the purchase of 62,745 January 2016 20 puts for $3.75. The trader is spending more than $23 million on the position, which is betting that the VXX will be cut by more than half in the next two years or so. (See our Education section)

Yesterday it saw a trade in the opposite direction, looking for a floor in the stock.

The VXX is composed of the two nearest-month VIX futures. Because they typically carry a premium to the spot volatility index, the VXX has a structure that ultimately makes it tends toward zero. As a result,  it has already undergone three 4-to-1 reverse splits since its intiation in February 2009.

Today the VXX is down fractionally to $48.40, a new all time low. It can pop higher at a moment's notice, but the general trend is definitely lower. 
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »