Save me from myself

[DennisR]

Quote from Mvic:

Dennis sorry for the knee jerk reaction (jerk probably being the operative word, thanks lindq your more measured response made me see that I could have been more helpful even if my intentions were good), I didn't read your whole post before reacting to my own past and so many other newbies that make similar mistakes. Obviously you work hard for your money and it is just sad to see it being lost so unnecessarily. I think back to when I made similar mistakes and what they cost me and wish someone had been blunt with me then rather than having to learn from my mistakes at the hands of the market, the most ruthless and unmerciful teacher.

OK this is not advice, that you have already received, get out of the trade BUT if found myself in your position, and it really is about as snookered as one can get in terms of trying to salvage something from the trade I might be tempted to look for an offset that would keep me in the trade without too much downside. Perhaps I might consider selling the Spy 132 puts and buying the 130s and keeping my vix calls. If the market spikes down to 132 the likelihood is that the vix calls will offset more than enough and if the market doesn't or moves up then you are no worse off than you are selling now (actually better off). It keeps one in the trade and if a sell off does happen (I actually think we are going to drift up into expiration but I could well be wrong) I think few are expecting it here so it could be sharp, but as I said I think this is unlikely. The key is that the credit from the spy put spread needs to be enough to fully offset the value of the vix calls minus and plus respective transaction costs. The vix calls are bid .1 and you have the cost of unwinding the position so as long as you can get a credit (minus commissions) for more than $10+ commissions it is an option I might consider. Right now the net credit at market is $19 and even with the commish it should more than cover the liquidation value of the vix calls.

Likely what will happen is that everything expires worthless and the position ends up a little better off than it is now (in % terms actually with at least a 50% gain depending on what your commissions are and what credit you will get for the puts in the am). If the market tanks, again unlikely imo, then you may get a much better result and it doesn't cost you anything to take that risk (except opportunity cost which given your newbie status I am putting at $0 or at least less than the return of the credit from the spy put spread).

Again my advice is to get out of the trade but wanted to let you know what I might do if I were in your position and didn't have any opportunity cost for staying in the trade (and assuming I had available BP to put on the put spread).

Best of luck and I leave you with another quote that may also be helpful :"Press on: Nothing in the world can take the place of perseverance. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent."

Calvin Coolidge

Hey thanks man. It's cool. I thought your last post was pretty fuckin funny. (get it)

I looked into similar offset selling but my bp is shot. I'm going to take a Q1 writedown on this one, lol. Oh well lesson learned.

You what really burned me? My nature is so easy going. Nothing gets to me and i'm very stress free. I thought that would be a good quality for trading. not freaking out, overreacting with every market move that's against you. instead i just watch my account lose mass amounts and i don't sound the alarms when it does. The trait i thought would help me is hurting me.

 

[gwac]

Most successful traders have blown up their account before they became disciplined . Lessons are hard but learn from them.

Before you get into a trade, have a reason and have a pre determined stop, that you stick to. Do not ever double up a loss
position.

Do not give up. YOU HAVE TO BECOME disciplined .

Try something that is not so leveraged.

 

[ammo]

first of all, you sell premium in a trending mrkt, or a summer mrkt which might just lay there or drop(sell in may and go away)this is not a trending mrkt,its super volatile and has moved 300 -400 points in 1,2,3 days time,if you are a premium seller or a vix trader,they couldn't be more diverse, you have to recognize the mrkt on a bigger timescale,if u double down and then triple,mentallyyou have wiped out your ability to recognize what type of mrkt we are in,you are so overleveraged compared to the amount u r comfortable losing.u r now trading blind,hence the title of your journal.u may b right after monday we may puke into exp or monday after,forget about how much u could make,that is gambling not trading and vegas was built on that pschyk scenario,so there are ??? what wrong with your trading style, u tell, we'll listen, see if u have figured it out

 

[tropicaltrader]

How about not taking so much risk next time? If you're about to blow out now and nearly blew out in January, you're taking way too much risk.

As for luck... you said you were unlucky to be in the market in 2000 and now. Come on!! Consider yourself lucky you didn't start your iron condor strategy in August 2001.

Everyone gets their share of good luck and bad luck. The good traders don't blow out when they encounter bad luck.

 

[Thermactor]

Quote from ammo:

first of all, you sell premium in a trending mrkt, or a summer mrkt which might just lay there or drop(sell in may and go away)this is not a trending mrkt,its super volatile and has moved 300 -400 points in 1,2,3 days time,if you are a premium seller or a vix trader,they couldn't be more diverse, you have to recognize the mrkt on a bigger timescale,if u double down and then triple,mentallyyou have wiped out your ability to recognize what type of mrkt we are in,you are so overleveraged compared to the amount u r comfortable losing.u r now trading blind,hence the title of your journal.u may b right after monday we may puke into exp or monday after,forget about how much u could make,that is gambling not trading and vegas was built on that pschyk scenario,so there are ??? what wrong with your trading style, u tell, we'll listen, see if u have figured it out

sorry ammo but your posts are unreadable.

 

[rallymode]

Quote from Mvic:

....I might be tempted to look for an offset that would keep me in the trade without too much downside. Perhaps I might consider selling the Spy 132 puts and buying the 130s and keeping my vix calls. If the market spikes down to 132 the likelihood is that the vix calls will offset more than enough and if the market doesn't or moves up then you are no worse off than you are selling now (actually better off).

I would refrain from giving advice on a product i knew nothing about. A touch of 132 on the spy by next tuesday and Dennis will be down 1 handle on the put spread while his VIX calls may be up a dime. You cant fight convergence this late in the cycle[or ever] by selling cheap gamma. Option position repairs are a myth.

 

[kinggyppo]

Quote from rallymode:

I would refrain from giving advice on a product i knew nothing about. A touch of 132 on the spy by next tuesday and Dennis will be down 1 handle on the put spread while his VIX calls may be up a dime. You cant fight convergence this late in the cycle[or ever] by selling cheap gamma. Option position repairs are a myth.

This is a sticky problem, reminds me of the guy who was on youtube down like 25K when socgen almost crashed us. Do you get out and eat it, or hedge. If Dennis was able to hedge (I don't know as I don't trade vix options), he still has a locked loss and at some point is going to face the same risk.

 

[Mvic]

Quote from rallymode:

I would refrain from giving advice on a product i knew nothing about. A touch of 132 on the spy by next tuesday and Dennis will be down 1 handle on the put spread while his VIX calls may be up a dime. You cant fight convergence this late in the cycle[or ever] by selling cheap gamma. Option position repairs are a myth.

I admit that the vix is not your fathers vix and I long ago soured on using it (I freely admit that that is probably because I don't get it anymore but I am apparently in good company on that score), as far as Dennis goes my advice was to exit the trade and take what he can get.

Nevermind, I had forgotten that the vix options exp on the Wed, not even close to being worth the risk trying to salvage anything. Good call out rallymode.

Your post implies that you are well versed in the instrument, I would be interested to know what you would do if in the OPs shoes?

 

[shortie]

those VIX calls might just work out

VIX (CBOE MARKET VOLATILITY) 23.48 +1.50
Apr 11, 2008 @ 16:12 ET

08 Apr 27.50 (VIX DY-E) 0.20 +0.05 0.15 0.20 11945 32853