Another greatest event is going to happen and the world is watching closely the US presidential election, 10 days away and would it be Hillary or Trump? I have no idea but what has been the most dramatic moment is the development of the event which is unprecedented in the US history. It begins with the nomination of Trump to the re-opening investigation against Hillary. 

The world development fascinates me and gives me ideas to trade. As an option trader, news (already happen) is not very important but the impending news (not yet but will surely happen) provides a greater and safer opportunity. It should impact our trading portfolio positively regardless who wins eventually (I do wish Obama to take on another term but that is not possible). Base on the market sentiment, if Hillary wins (higher probability), the market will rise and if Trump wins (lower probability), the market will collapse in short term. It is indeed a binary event. We can either choose/bet a side or for a more sophisticated trader, we can trade the volatility from now onwards to The Day.

It is expected that the volatility index, VIX (fear indicator) is going to shoot up when the US presidential election is approaching. Once the result is out, it should drop back to the original level.

There are few ways to trade this idea. You can buy VXX or UVXY (both are volatility ETF/ETN in which UVXY is 2x leverage) directly or do a cover call against these ETF/ETN. This position should be initiated now and close on the event day, which is the US election day. The following is what I have done.

As I am a more aggressive trader, I do not fully cover my position with sell call, which means, if the UVXY moves up over 22 (as per the screenshot above), I will continue to make money because it is not fully cap.

There are numerous ways to trade, so trade smart and trade creatively! Have fun!

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