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About This Week’s VXX/AAPL Trade …

Yo Pit Crazies

 

Federal Reserve Chair Jerome Powell split the uprights, went yard on the hanging curve, put the biscuit in the basket …

 

Or, put another way, J-Pow made stocks happy with his FOMC pronouncement yesterday.

 

Stocks ripped after spending most of the morning in self doubt.  

 

VIX crumbled, too, as I predicted earlier this week that it would.

 

At first glance, that would wreak havoc with my Apple Inc. (Ticker: AAPL) puts and iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) puts.

 

I promised an update this weekend, but I was able to close yesterday …

 

So let’s take a look at it and the crazy good AAPL trade we put together in the Trading Legion.

 

Take Your Money When You Can

 

Recall the trade idea was:

 

      • Long AAPL Dec17 170 puts 1x $1.19
      • Long VXX Dec17 20 puts 5x $.25

 

The trade really wanted to wait for the Fed to speak, but something goofy happened prior to that.

 

AAPL fell out of bed and my puts shot up to a high of $2.00. I held them looking for a total payout on the VXX puts, which required $2.45 per AAPL put.

 

I did not get it.

 

I actually had to briefly pause a session with a Pro student to take what I could get – about 1.70 average per AAPL put – or I would have been grumpy for missing the win.

 

Remember: When trading delta neutral strategies the most important thing is booking a winning side.

 

I was short of a home run, but also was left with a low bar to make profits.

 

After all, if I just got back to what I paid for the VXX puts I would be up .50 per pair or 20% return.

 

My outlook was VXX and vol in general would be lower post-FOMC, as had been the trend for nine out of 10 FOMC meetings. There was no reason to change the outlook, especially after banking half the cost of my VXX puts. 

 

VXX dropped big and I closed the VXX puts for $.35 or $50 per five lot.

 

That gave me $100 per pair – or a 40% return for 3 days.

 

I will take it

 

The Rundown

 

Option Shopper

Licia Leslie puts on her best trading shoes to find option bargains using market making and charting experience. Generally debit options and spreads with low risk, high reward setups. Short hold times are the norm.

 

      • The Queen of the Candlesticks likes Verizon Inc (Ticker: VZ) calls. I think Santa will be nice to her.  She was looking for a new pair of Gucci slippers.
      • Licia is also going live today at 11 a.m. EST. Join her live for an exclusive trade!

 

Capitol Gains

Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

 

      • Liking call spreads in Cliffs Natural Resources (Ticker: CLF) and QuantumScape Inc. (QS).

 

Other stocks currently in the CAPITOL GAINS portfolio:

 

      • Mandiant Inc. (Ticker: MNDT) long cybersecurity
      • PetroBras SA (Ticker: PBR) long oil
      • SPDR Oil and Gas Explorers (Ticker: XOP) long oil
      • Invesco QQQ Trust Series 1 (Ticker: QQQ) portfolio hedge
      • Canejo Corp. (Ticker: CCJ) long Uranium play
      • Ford Motor Company (Ticker: F)
      • Palantir Technologies Inc. (Ticker: PLTR)

 

Power Income Trader:

Power Income Trader is a systematic approach to trading inflation. By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.

 

Bill’s take on Uranium Realty Corp. (Ticker: UROY) Uranium Royalty Company: Good royalty companies crush it … They offer investors leverage over the underlying commodity without all the risk associated with actually exploring for, or trying to mine, anything profitably.

 

It’s not too late to catch his Power Income Trader program.

 

Pros can also check him out every Monday morning.

 

Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.

 

      • Mark sold more Uber Technologies Inc. (Ticker: UBER) calls for a 45% gain.  

Robinhood Trader:
Option Pit CEO Mark Sebastian uses the Robinhood Gamma Radar to find order flow in active MEME  names.

      • Mark has closed five RHT trades in a row for wins. Now he’s  looking for a bounce in DraftKings Inc. (Ticker: DKNG)

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 mostly banked some short vol positions into the close yesterday. 480-strike SPY calls were paying some bills.

 

 

 

Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle/calendar trading vehicle. The goal is to teach students the best times to buy options.

 

During the Trading Legion live session we looked at the AAPL 172.5 straddle trading $5.20.

 

By EOD it was 7.50.

 

Watch the session and learn how to price events here.

 

 

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 VXX and UVXY options.

The Option Pit VIX Light Is Moving to Yellow, but I do expect VIX to 17 by Friday.

 

Mark is long a bundle of VIX puts he will most likely ride to Friday.

 

I closed Volatility Trading Club Trade No. 273 puts for a 60% gain and own the VXX Dec. 23 25 calls for free. I will most likely add more put leverage.

 

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,

 

AG

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