In the chat room Monday, subscribers reported jumping on call options when VXX was bottoming Friday inches from a compelling downside target at 27.45. Accordingly, I am establishing a tracking position of four 21 Sep 30 calls @ 0.24, the worst price reported. As always, I’ll suggest offering half of them for twice the price paid, good-till-canceled, and a third option for quadruple the price. If you hold stock instead, you should scale out the position at the same intervals where I’ve advised profit-taking on the options. Although we have know way of knowing how far this rally will carry, we have the wind in our sails at the outset, significantly reducing the risk of the trade. If VXX relapses, I’ll stop out the tracking position @ 0.15, but you’ll have the option of holding onto it if you please. ______ UPDATE (Sep 18, 6:15): The calls ticked 0.15, but if you held onto them don’t sweat it. VXX cannot but bottom at so clear a Hidden Pivot support as 27.45, even if the exact timing of its next flight of fancy is uncertain._______ UPDATE (Sep 19, 9:23 p.m.): VXX gapped below 27.45, showing unusual weakness. I still doubt that this vehicle can stay down at these levels for long or get pushed much lower. It’s akin to submerging a beach ball below the water line._______ UPDATE (Sep 20, 10:21 p.m.): VXX has been pushed beneath an ‘interesting’ Hidden Pivot with such force that we must consider a new target. The one shown, at 25.54, would be more compelling if the AB impulse leg had exceeded a distinctive low, but that is not the case. We’ll use it anyway to bottom-fish, but I’ll leave the details up to you. I’d suggest using just-out-of-the-money calls expiring in 5-12 days._______ UPDATE (Sep 30): On Facebook and in the chat room, I’ve focused on cheap vertical call spreads to leverage a possible ‘October surprise’. I bought a few Oct 19 [corrected from Oct 12 date originally given] 30-35 spreads for 0.34 on Friday, but may do so more aggressively toward the end of the week or early next, since things are likely to slow down on Wall Street this week as the nation moves toward a momentous decision on the Kavanaugh nomination.
