VIX-Trading. What is the best way to make money?

I want to give you details to yesterday's trade:

VIX JUN07 13 P (100) 2007-05-07, 10:08:45 CBOE
-2 contracts
$1.0500 * 200
$210.00 premium
-1.50 commissions (equal 0.714% half turn)

I've got $208.50 premium after commissions
I can keep the money if VIX stays above 13.00 on 07/19

actual VIX is 13.10
May future is 13.22
June future is 13.72

ca. $ 690 initial margin required
I will use a capital base of $ 1.000 to calculate the P/L figures.


VIXRO VIX JUN07 13 Put
-------------------------------

2007-06-20 $208.50
2007-06-20 -183.05

+25.45 +11.7%

Non realized profits are currently 2.5% vs. the above mentioned $1000 payroll.

----------------------------------------------------------------------------------
My basic expectation for opening this trade was:

VIX down to sideways trend

Breakout to the top is possible.
I don't expect the VIXM07 to close below 13.

The downside potiential of that naked put strategy is big, if the vola drops and the VIX falls.

I don't know the outcome of the trade. Any feeling or backtesting will bear no guarantee for the future. It's my believe it will work out for me.

Please do your own research on every trade you do. Do all the necessary money management and positon sizing.

I didn't use stops because of the specific structure of the VIX and the still big bid-ask spreads in futures and options on that instruments.
That is an exception for me and to the advisable and gereral rule that stops have to be in place with any new position.

Please post your questions and comments.
 

Attachments

Quote from gg12:

I want to give you details to yesterday's trade:

VIX JUN07 13 P (100) 2007-05-07, 10:08:45 CBOE
-2 contracts
$1.0500 * 200
$210.00 premium
-1.50 commissions (equal 0.714% half turn)
Please post your questions and comments.
More...

It's long time to wait, may be is interesting to buy-back (when the price fall @ 40% f.ex) the option and sell again constantly. During nice swing moves...

Can we have the historicals prices of this option? or a link...
 
Quote from gg12:

artes

Could buy the option for .80 or .85.
More...

If the position were mine. I will keep on my shorts. Except in the event of a market new rise & VIX fall. Will repurchase the shorts as the flight. And to resell at the time of VIX increase doing this again and again (fees are low). Also. Check the greeks.

May be 4 x 120-ç as better than 1x 210-ç

I hope this will helps
 

Attachments

Thank you artes!

I had the alternative to sell 2 (max. 3) puts at the 12 strike.

I checked out the required margin. To sell 4 puts was not possible, because the margin requirements are too high.
My Broker will liquidate the positions if I run out of margin. It's a kind of 'protection' not to loose all the money in one shot, but I like to have control over my account myself. So I give some room for the VIX to fall.

Finally if I can run this strategy with 1 put for the next 3 years, compound profits will add massively. I don't need the bankroll right now, so I can be patient.
 

Attachments

Quote from gg12:

Thank you artes!

I had the alternative to sell 2 (max. 3) puts at the 12 strike.


Finally if I can run this strategy with 1 put for the next 3 years, compound profits will add massively. I don't need the bankroll right now, so I can be patient.
More...

Yes , the good strategy with the poor MONEY MANAGEMENT will fail. Stay on the market! Trade Low as possible... (LARRY LEVIN say only ONE contract during SIX month at the beginning)
Dont be gready, this may kill your account!

Be patient, You are right!

Write down the rules, by hand on paper
Every day read it.
Be consistent with Yourself.

See You, in dreams, gaining, according to your rules, day after days.

Make Yoga and relaxation, some exercices, work around the streets.

And last but not least , Your brain is a good machine, learn to use-it. (! Psychologicals.. Brain is Endorphine, Dopamine producer )

A good money management, will enable you to remain in the market. Do not let the broker going to broke you.(your account)

Promise You. With you even. and on paper, signed! To comply with the RULES.

Do It!

No exception.
 
artes

Very wise philosophical statements!

May be to add that you have to be already in the positon you want(ed) to be.

You are in your favorable position. Congratulations!

No need to get there you are acting from there already!
 
Sold 2 VIX Calls on 05/14/07

VIX JUN07 16 C (100)
2007-05-14
-2 0.9500

190.00 Premium
-1.50 Commissions

It's a dangerous think, because Vola can spike up massively.
Account can be wiped out at a bigger downmove of the markets.
 
Yesterday's settlement values of the open position have been ca.

Calls $-93
Puts $-171

Details
VIXFQ 2007-06-20 VIX JUN07 16 C -2 0.857736 100 -171.55
VIXRO 2007-06-20 VIX JUN07 13 P -2 0.46918 100 -93.84
 
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