NaughtyPines
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VXX COVERED CALLS -- AN IMPORTANT AFTERTHOUGHT

AMEX:VXX   IPATH S&P 500 VIX SHORT TERM FUTURES TM ETN
An important afterthought ... . Keep in mind with VXX             that you've got that whole contango thing going on.

Over time, contango erosion has eaten into the price of this particular underlying (as well as similar products like UVXY             , TVIX             , etc.), so if you're going to go covered call, you want to take the position and get out as soon as practicable and then initiate a whole new setup if you're going to go that way, as opposed to buying and holding like you would with a stock (i.e., it's not a buy and hold play, it's a "take the money and run" play).

This is one of the reasons why the VIX             chart differs so substantially from the charts of its derivatives; the derivatives suffer from contango erosion; VIX             (being the "parent" instrument), does not ... .
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