So I'm referring to VXX, the volatility index fund ETF.... its tied to the vix, however its the underlying ETF I'm referring to and not the futures contracts. So when i mentioned 73 I mean the stock price of the ETF VXX, being at that level while I'm short say at 55 on the assignment. I wouldn't mind since the ETF never stays high for long. Only thing that might occur is that VXX becomes a hard to borrow and the rate skyrockets but on VXX I don't think that would be such a high probability.
it is high probability to be assigned, even miles away from expiration date and price, vix trade is one of those. i trade vix options regularly.
Yes it's guaranteed money until it's not when the market takes a downturn and when it takes a downturn, it can be a drastic downturn and it can wipe out all the premiums that you've earned from selling calls. So when you sell calls, it's better you do it with a spread and not a naked call cuz when the call prices go up, the sky is the limit and not even and you can be caught in a nasty short squeeze. There have been people who have lost millions (or billions in this recent downturn) when continuing to short VXX: https://www.reuters.com/markets/us/...olatility-short-after-stocks-rout-2024-08-07/ Consider yourself warned.
I'm not trading with gigantic risk. And if you think about it even if I do a sell call on vxx say at 55 and it skyrockets to 75 and I get the assignment at 55 I can just wait it out for volatility to collapse and the vxx to drop back to earth. It happens all the time. Vxx never keeps going up. It's had nothing but a downtrend after each run higher.
but you would own it at 55 and became a long trade, how long would it take to get out a collapsing position? almost never. if you really want to short, then short vxx directly. you trade options on vix options etn, aka vxx, that is for the unsophisticated.
I buy puts all the time on VXX and then diagonalize them works for me and I don't risk blowing up my account