Selloff Rewards Two Timely Option Bets

Tuesday’s downdraft demolished a key S&P support, implying sellers aren’t through yet. The rare, exhilarating — for bears, that is — selloff also kicked into high gear two options positions we’d acquired just hours ahead of the move — one using call options in VXX; the other, DIA puts. The former doubled in price in under two hours, while the latter tripled from the 0.72 price where subscribers had bought them earlier in the session. The timing was not mere luck. In the case of the VXX trade — essentially a bet that the steady downtrend in this volatility-tracking vehicle that has persisted for than a month would reverse sharply — we used two Hidden Pivot targets in conjunction to nail the precise low. The first was a 15.50 target for the VXX itself; the second, a 0.50 target for April 9 16 calls. They bottomed more or less simultaneously within pennies of their respective targets, giving us great odds for betting on a reversal.  The chart used to target the VXX call options we bought is shown in the inset.  As for the DIA trade, subscribers had averaged down on puts, buying some for 1.08 last week, and some as recently as this morning for 0.76 or less. As is our custom, Rick’s Picks recommended exiting half of both positions when their value doubled. As a result, subscribers who followed my original guidance hold positions that cannot lose but which have the potential to produce very substantial gains if the market selloff continues.

  • Nik Dobrev March 28, 2017, 1:25 am

    Amazing!! Well done ??