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iPath S&P 500 VIX ST Futures ETN Message Board

  • do.john67 do.john67 Nov 11, 2011 10:47 AM Flag

    Brent, Gap, others ...

    I just bought a small amount of TVIX to protect my naked VXX calls. I figure some protection is better than none. And, I certainly am hesitant to over purchase TVIX, for I don't want to take a big loss just trying to protect profits with 2/3rds of the profits available now just by closing out my calls.
    Any thoughts on using TVIX to protect naked VXX calls. Any way to calculate how much TVIX one should purchase for any given lot of way OTM VXX shorted shares?

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    • "Yes, but doesn't help with margin requirements."

      So just hedge with VXX, it reduces delta and makes some of those calls covered.

      "My naked calls use up a significant amount of my accounts buying power. "
      That alone is a big red flag. You will have to cover at exactly the wrong time if you over-allocate.

    • I never like seeing anybody lose money, and i'm certainly going to feel bad for all of you when it finally does happen. Notice I said WHEN, not IF. Every one of you is going to lose your account. Count yourself one of the lucky ones if you exit this part time trading thing you're doing now with only a 70% loss like JJ there. Sadly though, most of you will not be that lucky.

      The only people that make money trading are smart, patient, dedicated, full time traders that have put in thousands of hours over periods of years. I am always amazed at how many amateur part timers actually think they have a chance. They actually believe they can make money in the long run. What on earth would make you think that? They somehow have all forgotten that this is the most competitive, stacked against you industry in the entire world, and only the very cream of the crop survive.

      Man, the arrogance of people who think they can part time it and succeed. Wow....

    • in what way were you *not* disciplined?
      ie what would you have done differently?

    • jermainestewartonehitwonder jermainestewartonehitwonder Nov 12, 2011 2:18 PM Flag

      The problem with the strategy you all are talking about is if there is a big spike, the calls just explode way higher than you would believe because of implied volatility. So you can go along making 5-10% a month, then BOOM you lose half your money.

      I doubled my money in 4 months, then lost 55% for a net loss on shorting calls. I did get too greedy and aggressive. As a result I closed my account with a total loss of 70% of capital since the Dow's high of 14K.

      I'm just saying, if it seems too good to be true, it usually is. Now if I hadn't closed my account, just to make it back from a 70% loss, you need 233% gain, which is 25 consecutive months of 5% gain. The problem is, during those 25 months, at some point VXX may spike again and take all the gains away. So it's not free money.

      Now if you stay disciplined, you can probably take 1-2% a month out of this thing forever by shorting calls. The key is not too get too greedy like I did. Sad, pathetic lesson and it destroyed my life.

    • nice.
      the rest is just to practice mental discipline/patience and have them exercise worthless. also to know at what price you will exit if that 5% event does happen.

    • Dec 57 and 72, more of the 72's.

    • short, obviously, and I have them around 1.20+

      december calls are way too close to the money. will re-evaluate next week

    • what december strikes do you have?

    • Not much change going into close. I will wait until Monday. If Dow gaps higher, I will buy more TVIX. If market crashes Monday, I will take profits on the TVIX bought today.
      Not a bad place to be. I will take anything but a flat market. Even flat though, will profit off of theta decay. Life is good!

    • Yes, but doesn't help with margin requirements. My naked calls use up a significant amount of my accounts buying power. So buying VXX would be better for reducing my option margin requirements. But I do like the increase bang for the buck with TVIX, and the way this market has been whipsawing of recent, I am sure that I will be able to sell TVIX for a profit at some point over the next 4 weeks.
      My prediction for today is that we pull back during the last hour of trading today. If we surge higher instead, I may buy some more TVIX, because I am sure that we will have a pullback next week given the Italy and Greece chaos.
      Have those problems all of a sudden gone away?

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