Another VIX Call Play

Add July 25 Calls Now

By Bryan Bottarelli
Wednesday, July 02, 2008 11:52 AM EDT
Wed, 2 Jul 2008 15:52:00 GMT

PLAY: Buy the VIX July 25 Calls (VIX GE) at or under $1.65, good for the day.

Dear Bottarelli Research Member,

To follow up on my comments from this morning, watching today’s trading gives me a very uneasy felling. After all, many of the sectors that have supported this market from a complete wash-out are now beginning to unwind — and this could lead to the “capitulation” (or surrender selling) that many floor traders are bracing for.

If we do witness this selling pressure, then you better believe that the CBOE Volatility Index (VIX) will once again pop aggressively to the upside. Therefore, I’d like to protect against a dramatic downside move by once again entering the VIX July 25 Calls (VIX GE).

VIX

As you know, we entered these calls on June 30th for $1.75 and sold them on July 1st for $2.00, handing us a quick 14.29% gainer. But now that these calls are trading for $1.60, we have the opportunity to re-enter them for an even cheaper value and achieve a more explosive return on any forthcoming spikes in market volatility. With so much red on the screen and absolutely no buyers stepping in whatsoever, I think this play makes a lot of sense. So let’s protect ourselves by once again establishing a VIX call play now!

PLAY: Buy the VIX July 25 Calls (VIX GE) at or under $1.65, good for the day. Place a protective stop limit at $0.90 but to not place a sniper sell at this time.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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