Trade Details & Summary

VXX Short Call (LIVE Closing Trade)

One of the most consistent and profitable options trades we can make is shorting pure volatility with VXX and today we closed this naked short call in VXX after a couple days for a $420 profit.


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In this quick live trading update, I want to get a trade offer real quick. I'm trying to feed my daughter some lunch here but wanted to get this trade-off. This our VXX trade that we made; it was a short call that we sold in VXX just a little while ago. A great little trade.

In fact, I love trading VXX because it tends to be a pretty high profitability trade for us. What we do is we're shorting volatility as a whole through the VXX ETF.

When volatility spiked up just a couple of days ago, what we ended up doing is selling out a bunch of this 55 strike calls for about $200 a piece. Now 55, you can see, is way up here, it's like way, way, way up here for just one month out.

We had planned on adding more to this, but implied volatility has already dropped. As a result, VXX has dropped as well and today is going to be a big fat announcement in the market, so we don't want to trade around that. We want to get this thing off and close it out before then.

We're up to some real money on this trade. We're up about $417 right now on just these couple contracts that we sold, so we want to get this thing off.

We're going to try to get it off here at about $60 a piece, so we're just going to go ahead and right click, go to closing order, and then buy them back for $60 a piece. I think they should be pretty easy to fill; it's just a single leg.

Hopefully, we can get somebody to come in here and take the other side of our trade here. There have been about 90 contracts traded today, about 212 open interest. 2,200 open interest, so I think there's an ample market here, and VXX is also trading down on the day, so like I said, it should be something that we should be able to fill here in the next couple of minutes.

As always, we'll pause this video and then come back. This order is working here like I said. It's about 12:20 in the afternoon, and we'll pause this video and come back as soon as we get filled here today.

Okay, so we're right back here actually and looks like the order got filled. It only took about two minutes to get it filled, but we were pretty patient waiting for our prices were we for $60. That means we made about $420 on this particular trade.

Again, the reason that we did this thing is that we know that when implied volatility spikes up as it does in VXX, that it's always going to be dragged down lower, just purely by the way that these things are priced.

They've got this kind of like drag negative lower, even though the VXX might stay relatively the same after rolls. When we saw this spike up on the 13th here, we ended up making a trade. This is the day that we ended up making a trade, is the 13th right here, this big tall green one.

We sold some options, and now that this has come down, which we knew would happen kind of before the Fed announcement here, that apparently made this position profitable very quickly.

Hopefully, we have more spikes up in volatility; these are pretty good trades. Hopefully, you guys enjoy taking a look at these live trading in these videos. As always, if you guys have any comments or questions, please ask them in the comments section right below, and until next time, happy trading.

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