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« Straight Talk for the Un(der)employed Youth | Main | Stock Trader Welcomes Global Auto trading »

SK OptionTrader outperforms the S&P More than 5 to 1 in Just 6 Days

SK Option Trader opened a short VXX position on December 28th 2012 at $34.35 in order to take advantage of a fall in the implied volatility of the S&P 500 once the fiscal cliff negotiations finished and a solution was reached. Only 6 days later we closed this position at $27.70 for a profit of 24.01%.

The graph above shows how we were able to use the VXX to generate leverage of nearly 6 times the S&P. The period enclosed in the black band is that which the trade was opened for. One could have bought the S&P to take advantage of a rally resulting from a fiscal cliff solution during that time period; such a trade would have resulted in a profit of 4.06%.

However, SK  OptionTrader subscribers were provided with a win of 24.01% times that through our short VXX position. This means that our trading strategy provided leverage of nearly 6 times the S&P! This position provided much better leverage, but also ensured that the downside risk of the trade was still limited through the purchase of a $70 VXX call. Therefore the risk reward dynamics were 6 times more favourable for SK OptionTrader subscribers than for those simply holding the S&P.

This kind of trading strategy is one of many that we employ to maximise the risk reward dynamics of a trade and to take advantage of the market as a whole. This particular trade generated returns of 24.01% just 2 trading days in to 2013, giving our subscribers a nice boost to start the year. If you want to know about this kind of move this year, then get on board as fast as you can! Use either of the buttons below to sign up and become a subscriber today.


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Reader Comments (1)

Just curious. What happened to our weekly updates? I haven't seen one since mid-December.

January 16, 2013 | Unregistered CommenterChris Norbury

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