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On Monday, people all over the world were able to witness one of nature's greatest extremes – an eclipse.
Whether you were only able to catch a partial eclipse in your hometown or you were one of the lucky ones in the 68.35-mile-wide swath of land stretching from South Carolina to Oregon that was able to witness a total eclipse, this was a truly historic moment.
That's because onlookers witnessed the first total solar eclipse in the United States in 99 years.
Extremes in the natural world come in many forms, but eclipses have always intrigued me.
When I was senior in college, we had an annular solar eclipse – when a small ring, or "annulus," of light remains circling the outside of the moon as it passes across the sun.
Since I was viewing the eclipse in the southeast, we had near blackout conditions with 99.7% of all light blocked – dark enough for the animals to freak out.
Dogs were visibly agitated…
The waterfowl at the famed Virginia Tech Duck Pond tucked their heads under their wings…
And for me, the strangest eclipse observation was that everything from leaves to branches to buildings cast eerie crescent-shaped shadows as the height of the eclipse came and went.
It happened when I was in college… and again yesterday.
It's easy to understand why such an event that changes the visible world around us for a brief time causes folks to act strangely…
Extremes have that effect on people.
That's why learning how to recognize extremes – recognize when traders act emotionally and drive prices to extreme highs or lows – is at the heart of our 10-Minute Millionaire strategy.
Because once we understand how to feed off of the "strange" behavior of other traders, we can tap into the tremendous profit potential extremes have to offer.
That's why it's been my mission to make each and every one of you a "connoisseur of extremes."
Piece by piece, I'm going to teach you everything you need to know about extremes until running this system feels like second nature.
Including the lesson I have for you today…
If we want to fathom the true moneymaking opportunity at stake here, we need to understand just how quickly these types of extremes can come to fruition.
And to help paint a clearer picture, let's look at a recent trade from my 10-Minute Millionaire Elite service, Stealth Profits Trader…
Anatomy of a Millionaire-Making Trade
On Aug. 8, the saber-rattling between North Korea and the United States reached a crescendo after North Korea threatened a nuclear attack on Guam, a U.S. territory.
And how did the stock market respond to this geopolitical turmoil?
With its first 1% loss in months.
When the stock market has a big down day, fear and uncertainty come into play.
One of the ways these emotions show up is in the volatility index, or the "VIX" for short.
To put it simply, the VIX is calculated by monitoring the amount of premium people pay for put or call options. When options get more expensive, this tells us that traders are demanding higher payments as a type of insurance against future uncertainty.
Because of this characteristic, traders have dubbed the VIX the "fear index."
As the fear of a stock market fall increases, the VIX rises.
So on that Thursday, Aug. 10, stock prices were dropping while fear, uncertainty, and the VIX that measures them, were rising.
But that doesn't mean it was time to head for the sidelines. Quite the opposite, in fact.
With my heads-up, my Stealth Profits Trader subscribers recognized the situation for what it was – a short-term extreme.
Better yet, it was a short-term extreme that was directly in line with our current narrative.
Under the Trump growth narrative, every market dip has been met with buying.
While this narrative will most likely change soon – it hasn't changed yet.
With that knowledge in hand, we were able to exploit a short-term extreme in the VIX…
You can see that when trouble arises, the fear index jumps (top graph), but for many months, there has been very little follow-through after a short-term spike in the VIX.
The same thing was happening on Aug. 10…
In fact, the VIX was higher than it had been in months.
Expecting that volatility would quickly return toward its recent levels, I made the bold call that the fear was "overdone."
We targeted an aggressive play with short-term exposure to the volatility exchange-traded note, the VIX Short-Term Futures ETN (NYSE Arca: VXX).
Following the 10-Minute Millionaire system, we picked up contracts in VXX Aug. 18, 2017, $12.50 strike puts (VXX170818P00012500) with an excellent probability that we could profit from the coming volatility drop.
And that bold call played out perfectly. Let's go through it step by step…
About the Author
Nationally recognized technical trader. Background in engineering, system designs, and risk reduction. 26 years in the markets.