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So, we've spiked back to the top end of the range with just two day's worth of trading. Running from 15.40 all the way to the 50-day simple moving average at 20.33, anyone who followed my bullish call from last week should be looking to lock in profits at this point.

(click to enlarge)Spot VIX 6 Month Performance

We have already seen an intraday decline from the opening at 20.41 to a recent low (as of 1:50 PM) at 18.60. There has been a corresponding though not as severe decline in the gains in the volatility products. VXX opened at 14.27, spiked to 14.72 and is already down to 14.02.

There should still be significant profits for anyone holding long volatility positions from last week and I would recommend either exiting the position now and locking in your profits or, at the minimum, taking half off the table. Too many times have I had a winning long volatility play turn against me and I just don't see us heading further down the rabbit hole on the first attempt.

Prudent Trading

Previous burns might be influencing this call to be a bit early, but we have already seen the VIX spike to the high end of the range and the futures move up relatively lightly in comparison. With the term structure now standing at:

Spot VIX: 18.60

Aug Futures: 20.63

Sep Futures: 22.10

We are back to a more reasonable term structure now that spot VIX is off the floor and recovered from the options expiration induced coma. While we could always go higher from here, I would expect the top end of the range and the bounce off the 50-day Simple Moving Average will provide anyone interested in long volatility plays the opportunity to reload at lower levels.

If you are less cautious and want to keep your position you can alternatively sell calls against your long volatility positions to lock in profits and protect against contango. Either way, I believe that now that we are back at the top of the range, caution and prudence should have a seat at the table to protect your gains and continue growing your capital.

Earnings are coming in low and Europe is a complete basket case but even so I feel that the easy money has been made on the trade and those that played it should be looking to enjoy their gains in VXX, TVIX and UVXY and wait for the next set up.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.