VXX Bearish inclined Naked Calls 11 Mar Expiry (Mar Track 1)Whats The Plan/Trade/Thought
I entered this position as I believe that we are currently in a sideways bearish situation. The markets took huge dips since late Nov to Jan and while it has recovered some of that loss. The S&P and especially the NASDAQ show that at least for now, the constant bold bullish days are narrowing
Even though I am taking a sideways bearish stance. I still sold calls as we have just gotten out from a terrible 3 months of nose bleed drops and I think there will be some respite where market participants will try to determine what is the next direction
Writing calls also allow me to develop a hedge on the other trades which will be bearish
I Feel
I entered this trade on Monday and it feels almost clinical as it was already part of my plan and the indexes were aligned
I would have liked to get a better price to weather some potential volatility but it is a decent price at 0.71
I would have also preferred to have this trade expire on the 4th March way before the mid March inflation implementations
Imagine Yourself Taking The Other Side
I would be slightly worried as the market in the past 2 days have been bullish.
Also I did try to initially take a sold PUT trade, but the prices for them and the % from strike were not optimal. I guess the market expects more bullishness?
Imagine Yourself As A Neutral Observer
VXX eats alot of margin fast as it is also a reflection of the tech stocks. And that could limit the fund’s movements.
Regardless of direction I think with a good 63% of space between the entry and strike is prudent
Look For New Information
I am accepting that if the market does furiously dip too fast and too hard. I might be in a difficult position. The good news is that the major Tech earnings are over.
How Do I Feel Now
I neither feel happy or worried. Just somewhat clear but edgy given what we have just gone through in Nov - Jan
Trade Specs
Sold 125 Calls @ 0.71 - Strike 33
% to Strike 63%
ATR 64%
BP used is 91k
Max Gain: 8875
