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Monday, August 16, 2021

Why am I reluctant to share the exact trading for VXX?

I generally don't share trading specifics in public and more so for VXX. Why?
Well today's VXX price action is a good example to explain why. As you know, I said last Friday that I was expecting a high volatility within days and more specifically a hike of VIX early this week. The primary reason for my call was due to the flashing of my crystal ball, the VIX call/put ratio in its extreme. As I said, I was accumulating VXX.  Following my blog posting, I got some requests asking if I could share my trade specifics. I of course couldn't. One major reason is that VXX is only good for short term trading, not for long term holding. Given the nature of the volatility involved in VXX, its prices will move very quickly and swing widely even during the day. For example, VIX jumped 15% at the intraday peak, meeting my crystal ball calling. As such my short term long VXX option positions shot up nicely today. Judging by the call/put ratio change for VIX, it appears to me that the VIX jump for this week is likely done, although I still expect a higher VIX in the next two weeks or so. Therefore I cashed out my short term profit nearly at its peak. Fortunately I did so as VIX quickly deflated after its intraday peak and gave back most of its gain for today. If I just held my VXX calls, it could be a loss in the next few days if VIX continues to decline, which is likely for the next few days. Actually I even placed a small trade to short VXX for this week today. 

If I shared my trading specifics with others, most likely it wouldn't be doing anything good for them unless they know very well how to follow the VIX dynamics and take quick actions accordingly. I doubt many people can do that.

Again, for VIX, I don't expect drastic moves for this week anymore but high volatility is still in play for the next two weeks or so. Don't be fooled to chase highs from here! 

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