Recommended trade entry for Friday, November 3
This is our first VXX Call Spread trade, as outlined in the Weekend Update published October 28. As I mentioned, this is NOT a trade that we recommend trading in a large size. This play has a good probability of gains, but we are keeping our target gain and stop loss small.
Today's suggested trade entry will be:
SELL VXX November 10 36 Call, currently .41 credit. Delta of short call 25.
BUY VXX November 10 41 Call, currently .14 debit.
It is recommended to place the order as a single entry: SELL " Vertical".
Current mid price for both legs: $.27. Sometimes it may be necessary to cave by .01 or so in order to get filled, but it is not recommended to open the position unless you can get $.25 credit. The margin on the trade will be the width of the spread ($500), less credit received.
Update will be posted with exact position details when the trade is opened.
As always, stay keen on your risk management and trade carefully,