Almost Ready to Trade Volatility

Its almost that time again fellow Masters, we've done this trade countless times -- Buy the iPath S&P 500 VIX Short Term Futures TM ETN (VXX) when it hits a 12 month low.  Only 3.8% more and we execute this trade again.

SC brought up this same point this past week in Volatility Ready to Spike (VXX, UVXY).  Recall the last two times we placed this trade, we talked it up back in March in Cut and Paste the VXX Action.

The VIX once again has fell below its 50-day moving average.  As you know volatility products such as VXX track VIX futures contracts, not the spot price. The VIX hit 16 on Friday (April 27th) and the last time it bottomed was at 14 in March.

Be patient with this trade, no need to be a hero and come early to the party, the VXX could tank another 10% from this level.  We wanted to make you aware and when the VXX hits a new 52-week low, its time for action.  Do not hold the VXX for more than 5 days, its swings too much.  

MASTERY Bottom line:

We prefer to buy the VXX after it falls to $14 a share and please use caution.  Don't bite off more than you can chew.