In my latest post about an investment in the ETN SVXY, I talked about the opportunities and risks of volatility investments. This was nearly 2 month ago, since then the volatility was further declining and more profits were possible. What I think is important is to give you some idea how to find such trades and how to secure profits and stay in the winning trade.
How can you find such chances?
I wise man once said “when blood is running in the streets it’s time to invest”, and as of today, this quote is still true. Every global event that influences the markets e.g. the BREXIT vote this week on 23 th of June is such an event. Such events sometimes or very often lead to very rapid movements in the markets which brought the volatility to rise very fast.
An example of this was last week on the 14th of June the volatility ETN – VXX rose up to a level of 17 in a very short timeframe, therefore there was an opportunity to go in first very small (!)short position or to be on the short Call options, only 1 week later I was able to realize a nice win out of this trade. See also the chart below.
Is it even possible to stay in the trade and secure the winnings?
To come back to the mid to long term opportunity in the SVXY volatility ETN which presented in April. Following the chart one can see a very nice and clear upward trend (dow theory) therefore, it was possible to adjust the Stop-loss of this position accordingly up to at least of a level of 51 USD, since the 13th of June the upward trend broke. As you can see the exit of one position can be used as the entry of another position as on the next day I entered my above-mentioned trade in the VXX ETN.
I hope this post was interesting for you and I could give you a brief info on how to trade volatility products in a nutshell.
For more info’s just leave a comment.