VXX Weekly Options Traders Look to Pin Down More Losses

Weekly call and put traders are focusing on at-the-money VXX options

Jan 31, 2017 at 1:41 PM

In keeping with its usual trend, the iPath S&P 500 VIX Short Term Futures ETN (NYSE:VXX) has been having a rough go of it on the charts lately. VXX shares touched a new all-time low of $18.89 on Friday -- and while the CBOE Volatility Index (VIX) spiked to start the week, VXX remains pinned below its descending 20-day moving average. Against this backdrop, a number of weekly option traders are betting on VXX to continue its decline through Friday's close.

In the option pits, the weekly 2/3 19.50 strike is home to heavy open interest for both puts and calls, with 13,705 puts and 7,734 calls outstanding. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) confirms sell-to-open call activity at this strike yesterday, as well as buy-to-open put activity. This indicates option traders on both sides of the aisle are betting on a continued retreat for the shares, which happened to close squarely at $19.50 yesterday.

Taking a broader look at VXX's downtrend, the shares have dropped nearly 84% from their February highs above $123. VXX's 20-day moving average hasn't been surmounted on a daily closing basis since early November, just before the post-election Trump rally kicked off.

At last check, the iPath S&P 500 VIX Short Term Futures ETN (NYSE:VXX) was trading up 1.7% at $19.83 -- easily within "pinning" distance of that popular weekly 19.50 strike, and more than 5% below its 20-day moving average.

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