This post was just published on ZYX Buy Change Alert.
This idea is appropriate only for aggressive investors as the risk of loss is high. VXX is an ETF that represents short term volatility in S&P 500. VIX, the volatility index, is hitting seven-year low.
The concept behind this trade is simple. First everyone is on the low volatility side, markets like to make fools of the maximum number of people. Second, the potential gains can be large if the market experiences a correction.
Consider accumulating up to 40% in the zone of $25-31.25. VXX closed at $30.55. In a 10% correction VXX can reach $47-53. Stop zone $23-24.45.
Please be aware that VXX exhibits tracking error. Also high volatility necessitates the need to scale in over a wide zone.
