The Difference Between Big Crisis and little crisis

Yo Pit Crazies,

Frank and I ran the Next Big Thing last night, and it was off the hook.

If you want to see where the future is going, click this link.

I will give you a taste here. Last year, we had COVID and potentially massive government destabilization.

Or so the media told everyone.

Well it did not happen (OK, sort of) but we now have a collection of small problems, not the Plague.

Just annoying disfunction week after week

Here’s how to trade it …

VXX Is Not the Product It Was Last Year

Things have changed for the iPath Series B short term VIX futures ETN (Ticker: VXX).Note it is down almost 80% from November 2020.  This is very reminiscent of post-2008 and post-2011 and several vol-pocalypse crashes I have seen before. 

VXX 1-year chart

What is funny is that VXX charts look a lot like this every year, with just a slow decline and some violent moves. We are back to the era of general Washington Volatility but not Catastrophic Volatility.

Frank’s take on this is that we have a problem of governance not the threat ofgovernment collapsing, which makes a big difference for volatility.

I like owning Jan 2022 puts in VXX at the 18 strike.

The Rundown

Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session. 

The Pro Room was very active yesterday, with some reticence while waiting for tech earnings.

Volatility Edge & Volatility Trading Club:

Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use VIX future decay to pay for upside VIX, VXX and UVXY options.

The Option Pit VIX Light Is Red and we expect VIX to make lows after Tech earnings next week.

Mark scored in VIX Edge with a 69% gain in the VIX Oct. 20 18-strike puts. Tally Ho!

Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!

To Your Trading Success,


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