BY ANDREW GIOVINAZZI
December 31, 2024
Did you like the idea number 1 around the inauguration? That might even set up for a Special Situation going into the 20th but more on that in the future. The second big event should happen a couple of times in 2025 but 2024 exhibited some not normal behavior.
Below is a 1 year chart of a volatility product that I trade. Note that from July of 2024 until the end of the year it did not make a new low. That is not normal. Also note the “S” in mid-July. That is a reverse stock split.
If some of my volatility jargon is vexing, head to the glossary.
Generally these long volatility products split after and extended downturn. The one above did but stopped dropping. I do not think that can go on.
Click here to see what to do about it and how it will affect your trading.
The Ipath Series B VIX short term futures ETN (Ticker: VXX) has not made a new low in 6 months
Why is that important? Long term VXX has lost 99% of its value and generally loses 75% or more per year. The only thing that keeps it up is the continual reverse stock splits on a close to yearly basis. The market has experienced much higher volatility or longer going into the 2nd half of 2024. That is an opportunity.
The Options Insider Radio Networks Vol Views is a little extra volatility insight with Mark or myself every Friday.
That higher volatility usually does not last and VXX could be my vehicle to buy puts going into the Jan 20th.
Stay tuned for more Reverse Split Special Situations at Option Pit.
Andrew Giovinazzi
30-Year Trading Pro
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CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain