Do Not Trade Volatility Before Reading This

Dear Profit Takeover reader,

During today’s Profit Takeover show I shared a very important point about protecting your trades…

I used an example trade in VXX (which I later went over again during the Profit Revolution show) –

VXX is Barclays iPath Series B S&P 500 VIX Short-Term Futures ETN – which just made a HUGE error with bond sales, resulting in a $590 million loss…

I think VXX is heading back below 25 by the end of the week, so I walked through a bearish spread.

I don’t want to be naked long puts…

So it is important to hedge.

I may have invented a term this morning: “the spreadge” – or hedging a spread…

When I think I might not get the exact benefit I’m expecting on a trade,

I need to have covered positions –

Especially with volatility as wild as it is lately.

So I want to hedge a spread to cover the other side and cushion any potential loss.

When it goes live, watch the replay right here to see me walk through this spreadge in VXX…

I also wanted to give you a preview of tomorrow’s Profit Takeover show…

This is what happened during a single day drop in XIV – VelocityShares Daily Inverse VI –

It dropped almost all its value in one day…

And traders can get into a lot of trouble if they aren’t careful –

Even market makers didn’t see this one coming.

So make sure you stay tuned to tomorrow’s show and I can explain how to avoid losses like these.

Until next time,

Mark Sebastian
Founder, Profit Takeover

VIX LIGHT

Last week, I mentioned my yellow light was yellow but looking a little reddish…

And today it’s still wildly volatile so I am keeping it yellow for now –

VIX is at 21 as I am writing this, but has been slightly up and down all day so far…

VXX is still trading at a huge premium to cash and is all over the place today – touching above 30 and now down to about 26…

I’ll also be paying attention to whether they list SVIX this week –

If that happens, we will want to pay close attention to VIX futures.

LIVE SCHEDULE (ET)

Tuesday 3/29: 10:30 am-11:00 am Profit Takeover

Wednesday 3/30: 10:30 am – 11:30 am Profit Takeover

Thursday 3/31: 11:00 – 11:30 am Foundations of Trading Preview

Friday 4/1: 9:30-10 Profit Takeover

TODAY’S WATCHLIST

1. Apple Inc (NASDAQ:AAPL)

AAPL has been up and down all day and is currently at around 174…

Image from wallstreet.io

AAPL could be due for more of this little rally.

2. Energy Select Sector SPDR Fund (NYSEARCA:XLE)

Energy names are soft today – XLE is at 76 while I write this…

Image from wallstreet.io

I’ll be taking a look at XLE today during the Profit Revolution show.

If they get too soft, we will hop in and play long here.

3. Tilray Inc (NASDAQ:TLRY)

TLRY pulled back after a monster week but is heading up past 8 right now.

Image from wallstreet.io

We could see more follow through here.

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