tsla

Options Traders Take Aim at Surging VXX

The iPath S&P 500 Short-Term Futures ETN (VXX) is soaring as stocks sell off

Sep 9, 2016 at 1:49 PM
facebook X logo linkedin


Stocks are bathed in red ink today, with the Dow plunging the most since the June 27 post-"Brexit" bloodbath and the broader S&P 500 Index (SPX) on track to snap its noteworthy stretch of low-volume sessions. As stocks sell off, volatility is surging, with the CBOE Volatility Index (VIX) set to settle north of the critical 14.07 mark. Echoing the sharp move higher in the market's "fear gauge" is the price action in the iPath S&P 500 Short-Term Futures ETN (VXX), last seen up 10.2% at 36.92. What's more, VXX options volume is soaring, trading at three times what's typically seen at this point in the day.

By the numbers, around 171,000 VXX call options are on the tape, compared to roughly 122,000 put options. The majority of options traders are of the eleventh-hour variety, with the weekly 9/9 series accounting for nine of VXX's 10 most active contracts.

Seeing the most attention is the weekly 9/9 37-strike call, where nearly 10,400 contracts have traded. It looks like one speculator may have combined these calls with the weekly 9/9 36.50-strike calls to initiate a long call spread. If this is the case, the goal is for VXX to be sitting at 37.00 at tonight's close -- when the weekly series expires -- allowing the trader to pocket the maximum potential profit of $0.33 per pair of contracts (difference between the two strikes minus $0.17 net debit).

Elsewhere, the weekly 9/9 34-strike put has garnered notable attention. It appears as if new positions are being purchased here, as options traders brace for an end-of-session retreat for the volatility gauge. Regardless of where the iPath S&P 500 Short-Term Futures ETN (VXX) settles tonight, though, the most the put buyers stand to lose is the initial premium paid.

Schaeffer's Weekly Volatility Trader recommends straddles to profit from market volatility. Make big money in short order with a discounted 30-day trial!
 

Two High-Octane Trade Ideas. One Simple Goal: Intraday Profits.

Dynamite Day Trading Signals delivers two same-day options trades every week — powered by proprietary intraday analysis and 43+ years of trading expertise.

But this isn’t just another stream of alerts.

It’s a structured plan with clear entry and exit points – designed for traders who want to act fast, trade smart, and wrap up gains before the closing bell.

No guesswork. No overnight exposure – Just two well-researched setups per week — whether you prefer buying premium or selling it.

And the results speak for themselves: subscribers have locked in +245.8% total profit over the last six months (since inception!).

👉 Start your one-month trial now for just $10, and be ready for the next trade alert.