Hey, Traders.
The VXX reverse split on Friday.
Earlier today the ETP was trading 39.75 with ¼ the shares outstanding.
If you had 100 shares for $10 on Thursday, you had 25 shares for $40 on Friday.
No change in dollars — but a big change in VXX price.
This is big, because the decay we track in VXX — the one created by the VIX contango that looks like this …
… that decay is calculated as a percentage of the underlying price of VXX.
That means if VXX was losing 1% a day at $10, it is still losing 1% a day at $40.
The difference is that 1% ballooned from .10 to .40!
So if this all happened on Friday, why was today the “BIG DAY?”
Because VXX listed the new options on the reverse split price.
This means I can now trade options on the adjusted price of VXX!!
This also means there is a huge opportunity to take advantage of that big contango and falling VIX to make money fading this product.
I released a juicy VXX trade today for my Volatility Edge clients.
I’ll tell you exactly what I did tomorrow …
The Option Pit VIX Light Is Red, and Volatility Is Likely to Drop.
Your Only Option,
Mark Sebastian