A couple of days ago we scalped a profit on VIX calls. We aren’t day traders but in that instance we bought and sold the same day. That trade made +$130.00 of profit per contract. We are going to take a slice of that profit and risk it in a low probability trade. This is a strategy that is highly likely to lose the full $30.00 at risk. However, the potential pay-off is great. And we are playing with the House’s money so to speak.
Please note: expiration on this is NOT next Friday. The expiration is the morning of August 21st and it will settle in cash. So, unless we exit early, this is an easy trade to manage. We can hold into expiration and let it settle. Worst case we lose -$30. Best case, we make some multiple of that up to +$470 being the max gain.
Buy to open: VIX Aug 21st (monthly) 25.00 strike call (ratio of 1)
Sell to open: VIX Aug 21st (monthly) 30.00 strike call (ratio of 2)
Buy to open: VIX Aug 21st (monthly) 35.00 strike call (ratio of 1)
Debit: 0.30
This is a lower probability strategy so a max loss is more likely than a profit!
Max risk = 0.30 or $30.00 per spread
Max reward = 4.70 or $470.00 per spread