This complimentary article from Options Profits was originally published on September 24.
Its official, the iPath S&P 500 VIX Short Term Futures ETN (VXX) will reverse split on October 5, four-for-one. While I am a little surprised it's not a bigger reverse split, it should make trading the product more fun, as the ability to capture larger moves in percentage drops is much greater for a $32 stock than an $8 dollar stock. Remember, a 3% move in an $8 stock is $0.24 while its $1.00 in a $32 stock. Much more fun to trade and many more dollars to be made being short. While at $8 the stock is less hard to borrow, look for that to change on the reverse split. That said, take off positions into the reverse split. We do not want to be holding options after the reverse split, we want to trade new options after the reverse split. This is a very good thing. Take a look at the video Jill and I did from the floor of the CME regarding VXX and the mechanics of a reverse split on the product: OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits. Mark can be followed on Twitter at twitter.com/OptionPit.
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