Trade of the week: long VIX
Given the plethora of US Federal Reserve (Fed) speeches, including by its chair Jerome Powell, US non-farm payrolls and historically higher market volatility in October, we would like to go long the volatility index (VIX).
We would like to do so with a stop loss below the August low at 15.25 and an upside target above the 30.00 mark.
(Partial video transcript)
Previous trading outcomes
Axel Rudolph: Hello, and welcome to this week's “Trade of the week” on Monday the 30th of September, 2024. Let's begin by having a look on our short soybean trade which we did on the 9th of September. And you can see here we went short, thinking that the downtrend would continue and it did go slightly lower.
You can see our entry level at 1,023 on this Daily Financial Bet (DFB) - actually 1,020 it was - but since then we traded sideways. And then last week, we actually went to the upside, but because we had a very wide stop on this trade above the lows seen back in April and the highs seen in early July, we are still in this trade at the moment, but currently underwater. So our stop loss is still at 1,150 on this one.
And the week after we went, I believe, long New York sugar futures and that trade worked out extremely well. You can see here we got in at 19.00 at 19.23, I should say here on this DFB and then saw a very sharp rally. And for those of you didn't get out at our upside target at 21.00 and then last week, I said the year we were trading at 22, 80, I had no reason to get out either. Well, maybe you have gotten out around the 23.50 area or so, but if you didn't, for me, an exit would have been, once we had this gap lower on Friday.
So I probably would have got another one to the 23.04 or 23.05 or something like that. But anyway, for me, that trade has probably run its course short term. You may want to get out now or you may hope for a bounce back still, which is also possible, but that's really up to you. But anyway, that trade worked out really, really well.
Watch the video for the full previous trading outcomes summary
This week's trading opportunity
With all the Federal Reserve (Fed) speakers coming up this week, and with Jerome Powell speaking and non-farm payrolls on Friday, and it being October when market volatility quite often increases quite dramatically, especially around the presidential election year in the US, I want to buy the VIX, the Volatility Index. So that's my trade of the week; to go along the Volatility Index.
So this week's "Trade of the week" is to buy the Volatility Index with a stop loss below the late August low around 15.25, and an upside target of probably above the 30.00 mark.
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