Break In - VXX trade

After a run up - for example
on 2/25 VXX moved from 21 to 25
on 2/26 openup and closed down high of 26.89 closed around 24.50.  So we are in contango have leverage vxx put spread. In a slight chance that it might shoot again we do a ratio spread.

so march  option  on feb 26th
Put spread - March 22 - Mar 20(.VXX130316P22-.VXX130316P20) for 30 cents
This can be profitable in next 3 days it would give 60 cents.

In case the vxx again rises the other side would be -.VXX130316C27+2*.VXX130316C29
for 15 cents. It could be sold in next 3 days for 10 to 15 cents.


DANGERS  - this trades need to be move immideately or else it can be painful to come out of the spread specialy the one with ratio spread.

Same could be done on 2/22

for - -.VXX130316C26+2*.VXX130316C28
and   .VXX130316P20-.VXX130316P18

Lesson 1 - come out quick if there is good profit.


There was a simillar opp on 12/24 Vxx truned down from a good runup 28 to 33. On 24th red.
 its was closing  red at 32.

So trade would be jan put spreads - 29/27 for 40 cents
and -1*34 and 2*37 ratio spread for around 30 cents.

AAPL going to 400 in next 3/4 week - 9th march

As per Cobras chart I am assuming appl reaches 400 in next few weeks.

Here are the option plays -

for apr 05 we have 28 trading days.

.AAPL130405P420-.AAPL130405P400-.AAPL130405P390+.AAPL130405P370

This can be baught for around 3/ 3.50 dollar ..too expensive may be we dont need that much time. Let see if we think it can move in 3 weeks.

.AAPL130328P420-.AAPL130328P400-.AAPL130328P390+.AAPL130328P370

this is also 3/3.50 dollar

A better play would be for 2 weeks We can get it around 1.50.  This will be a better play. Less money at risk decent chance if appl make a down move. We profit max if it moves anywhere between 423 to 405. So thats like 5 to 7 percent down move.

.AAPL130322P425-.AAPL130322P415-.AAPL130322P410+.AAPL130322P400

Trading High Momentum

In case we are not in a dowturn and market wants to go higher its best to pust some pair trade in both direction.

One of the stock which will move higher aggressively with market is NFLX. Thers is a option play here.

.NFLX130316C200-.NFLX130316C210-.NFLX130316C220+.NFLX130316C240  for 1.19 on march 03 -2013.

If the market dips and NFLX goes down to 180 from 189.37 it can considerd buy @ around .60 cents.


In case market is targeting 1585 by april we can also think about april options.

Trade back test - on 1/23 or 1/24

.GS130316P130-.GS130316P120-.GS130316P115  if you were betting on negative outcome you could get this for 50 cents.

if you had +ve expectation

.GS130316C150-.GS130316C160-.GS130316C165+.GS130316C170  for 1.70

or .GS130316C155-.GS130316C160-.GS130316C165+.GS130316C170 for .55 cents.

we need to trade highly liquid and market dependant stocks to make money this way.

So if the market is going higher best option as of now is Goog and NFLX


Goog for april calls -
.GOOG130405C810-.GOOG130405C820-.GOOG130405C830+.GOOG130405C840 for 2.0

or march 16 th call
.GOOG130316C810-.GOOG130316C820-.GOOG130316C830+.GOOG130316C840  for 2.70
or
.GOOG130316C815-.GOOG130316C825-.GOOG130316C830+.GOOG130316C835 for 2.21

Instead of doing this complicated options trade we can also buy little longer term spread.