VXX has collapsed beneath 27 to new record lows and could conceivably reach our ancient target at 26.32 as early as Wednesday. Since this could occur simultaneously with a DJIA top at an almost equally longstanding rally target at 25,278, there may be exceptional opportunity in trading their unplanned synchronicity. Accordingly, I’ll recommend buying four 19th January 28 calls if VXX trades below 26.38. I estimate the options will be trading for around 0.66 at the time, but you can sharpen your entry and improve your odds of paying fair value by simply monitoring the Bid/Asked spread as VXX gets within 20 or so cents of the target. I can’t guarantee this gambit will have been worth the eight-month wait, but we were at least able to ignore a hundred sucker-bait opportunities to buy calls as VXX’s ultra-slow-motion collapse has played out over time. We will be swimming against a strong tide, so this is a long-shot bet. Don’t risk more than you are comfortable losing. _______ UPDATE (Jan 3, 8:48 p.m. EST): VXX played toe-sies with my target all day long, recording an intraday low at 26.26. The calls traded down to 0.62, but I’ll record four @ 0.67 for the tracking position. For now, do nothing further. I am not suggesting a stop-loss, at least for the time being, because this trade was intended as a fly-or-die speculation for thrill-seekers. _______ UPDATE (Jan 7, 10:54 a.m.): No change. This play was speculative, with a little bit of Hidden Pivot ‘science’ thrown in, so we’ll plan on riding the calls to the January 19 finish line come hell-or-high-water. Price action at, near and around the 26.32 target so far has been interesting if not to say amusing.
