Thoughts about my VIX trade

Thats cool...

I just take the opposite tact. I dont bother posting trades, comments about money or wealth, or material goods or profits and losses. The internet is so filled with rubbish who bully and play the internet muscle game. I find it boring.

There is IMHO value in asking questions and posting proposed trades or theoretical trades. I just dont see the value in most posted trades since they're not going to be real time. I prefer to use the net for entertainment in answering questions I find interesting without the posturing if possible.
 
dberliner,
The market is dead today so I will throw out a few more things.
So you have been on the forums for 4 years, yet you haven't learned that there are few people here who know more than you, and you immediately dismiss their assistance.

You are actually naïve enough to ask where the Vix was a month after Oct. 87. What difference does it make? A huge losing trade that you are forced out of does not become a good trade because sometime in the future it works out. I lost count of the number of positions I closed out for traders who let their trade go too far against them, and they almost always would contact me at some point after that and tell me how the trade would have worked out. It is one of the defining characteristics of losing traders. You took it out, but you also said that we would all say that if the trade does work it must have been dumb luck on your part. I honestly feel sorry for you with that kind of attitude. You could have sold naked out of the money index puts every month since Oct. 2002 and been right every time if your money management was correct. That in no way makes those trades intelligent or good risk/reward candidates.

You started this thread asking for thoughts about your trade, and when everyone agrees it is not the best way to achieve your goals you ignore them. Not once have you asked what could have been done differently, or what would be the best way to hedge now, you ignored or dismissed everyone's concerns. You think I am attacking you for some pointless reason. You are incorrect, I have seen so many people lose so much money with bad trades I like to do what I can to assuage their vigor for improper trade management. It is possible to change one's attitude; I would think you might want to consider doing so.
 
Quote from dberliner:

Earlier this month I have performed the following VIX Backratio spread:


- Bought 10 May 2008 20C @ 4.8
- Sold 20 May 2008 27.5C @ 2.4
More...

Not sure if this is the most efficient way to profit from stable/lower VIX, but in general nothing wrong with this kind of strategy, if they are a small part of a larger portfolio and you can sustain a sudden shock upto 100.

Forget all those comments on how risky naked shorts are, insurance companies do that type of trade all the time (small premium received, large payoff if a house burns down). No problem as long as you have a diversified portfolio of risks and can sustain one or more disasters.
 
Quote from opt789:

dberliner,
The market is dead today so I will throw out a few more things.
So you have been on the forums for 4 years, yet you haven't learned that there are few people here who know more than you, and you immediately dismiss their assistance.

You are actually naïve enough to ask where the Vix was a month after Oct. 87. What difference does it make? A huge losing trade that you are forced out of does not become a good trade because sometime in the future it works out. I lost count of the number of positions I closed out for traders who let their trade go too far against them, and they almost always would contact me at some point after that and tell me how the trade would have worked out. It is one of the defining characteristics of losing traders. You took it out, but you also said that we would all say that if the trade does work it must have been dumb luck on your part. I honestly feel sorry for you with that kind of attitude. You could have sold naked out of the money index puts every month since Oct. 2002 and been right every time if your money management was correct. That in no way makes those trades intelligent or good risk/reward candidates.

You started this thread asking for thoughts about your trade, and when everyone agrees it is not the best way to achieve your goals you ignore them. Not once have you asked what could have been done differently, or what would be the best way to hedge now, you ignored or dismissed everyone's concerns. You think I am attacking you for some pointless reason. You are incorrect, I have seen so many people lose so much money with bad trades I like to do what I can to assuage their vigor for improper trade management. It is possible to change one's attitude; I would think you might want to consider doing so.
More...

You are assuming things that do not necessarily apply to me. I will be forced out of this trade only if I will not have the margin to keep it up, otherwise the trade would still have time to remedy itself. I think this trade would work out with very high chances of doing so.. I understand the problematic nature of being short naked, but even you would agree that being naked short a market as a whole is a little less risky than being naked short one stock. Also, I am only PARTLY naked and I will gracefully take my losses if they so happen by stopping out. Looking at the vix behavior for many years, it has always reverted quite fast back below 35 after spiking above, with spikes above being relatively rare.. that is not to say they wouldn't happen, and of course I assume risk here.. to be brutally honest, this trade is not my idea alone , but also that of a very experienced options player - a person who is certainly not unfamiliar with the concepts of risk, but is willing to assume it, when he thinks he has very high chances of being right.
If you have any fruitful ideas as of how to hedge this trade, I would be happy to hear them. I don't think there is anything wrong with my attitude as I am always willing to learn, and never assume I am the smartest, but always otherwise, preferring to sit on the shoulders of giants.
If you and some others who have replied would have said anything beside " This trade is bad, you suck as a trader" mantra - I would have certianly listened! I learned a lot from many of this forum's inhabitants.
I don't want to go down the quarreling path, please.. if you have hedging ideas, I would be happy to hear them, in fact, such ideas were the reason I started this thread.
 
Quote from dberliner:

You are assuming things that do not necessarily apply to me. I will be forced out of this trade only if I will not have the margin to keep it up, otherwise the trade would still have time to remedy itself. I think this trade would work out with very high chances of doing so.. I understand the problematic nature of being short naked, but even you would agree that being naked short a market as a whole is a little less risky than being naked short one stock. Also, I am only PARTLY naked and I will gracefully take my losses if they so happen by stopping out. Looking at the vix behavior for many years, it has always reverted quite fast back below 35 after spiking above, with spikes above being relatively rare.. that is not to say they wouldn't happen, and of course I assume risk here.. to be brutally honest, this trade is not my idea alone , but also that of a very experienced options player - a person who is certainly not unfamiliar with the concepts of risk, but is willing to assume it, when he thinks he has very high chances of being right.
If you have any fruitful ideas as of how to hedge this trade, I would be happy to hear them. I don't think there is anything wrong with my attitude as I am always willing to learn, and never assume I am the smartest, but always otherwise, preferring to sit on the shoulders of giants.
If you and some others who have replied would have said anything beside " This trade is bad, you suck as a trader" mantra - I would have certianly listened! I learned a lot from many of this forum's inhabitants.
I don't want to go down the quarreling path, please.. if you have hedging ideas, I would be happy to hear them, in fact, such ideas were the reason I started this thread.
More...

You're short variance, not a put on GE. And no, you're not partly-short, you're naked on a 10 lot. Your "very experienced" operator needs a bit more experience before recommending unbounded risk in index vol.

How difficult would it be to buy the 35C and fly it off? In reality, the trade is sh*t. You earn nothing under 20 on spot if the market continues to run higher and will be handed a $2 loss if the SPX drops 50.

You're in the wrong business if you view any trade you're not "forced out of" as a success. Applying unlimited capital to a position makes you a hobbyist, not a trader.
 
Damn, Atticus beat me to it. By the way, he is the one person here that I readily accept knows more than I do, so listen to him. He posts real time trades all the time; he doesn't run a multimillion dollar hedge fund with a high ROI because he doesn’t know what he is doing.

Dberliner, you have $100k set aside to keep yourself in this trade if things go really bad? Even if that is true, it is simple mathematics; your risk reward ratio is simply unacceptable. What you should do now depends on what you think the VIX will do from here. If you think it is going up I would buy back the naked 10 lot to make it a bull vertical, or at least fly it like Atticus said.
 
Quote from doginponyshow:

Give us one of your trades if you are such a big shot. You are a great teacher but I have a feeling you are not so good at trading.
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a great teacher does not try to humiliate his students..

I still prefer my own teacher.
:)

All in all, would you fade my trade?
 
Quote from atticus:

You're short variance, not a put on GE. And no, you're not partly-short, you're naked on a 10 lot. Your "very experienced" operator needs a bit more experience before recommending unbounded risk in index vol.

How difficult would it be to buy the 35C and fly it off? In reality, the trade is sh*t. You earn nothing under 20 on spot if the market continues to run higher and will be handed a $2 loss if the SPX drops 50.

You're in the wrong business if you view any trade you're not "forced out of" as a success. Applying unlimited capital to a position makes you a hobbyist, not a trader.
More...

Give us one of your trades if you are such a big shot. You are a great teacher but I have a feeling you are not so good at trading.
 
Quote from doginponyshow:

Give us one of your trades if you are such a big shot. You are a great teacher but I have a feeling you are not so good at trading.
More...

Can you use the search button or are you as thick as you appear?

OP -> Why are you short may vols in December? Any particular reason you chose that duration? There is no theta to speak of, only convergence. This far out there is none of that either. Having said that, I second the line of thought that whoever pitched the trade to you has much to learn about trading var. Further, TOS is a joke when it comes to modeling VIX so use at your own peril.

My 2 cents.
 
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