Wes isnt wrong - he's wise..
It was he who said that oppty for shorting is AFTER the fiscal cliff ends. He's right. VXX can fall fast - he was right there.
I am a 'permashort' and held positions during this ride - I didnt like it today and dont like the lack of contango this month. I feel I'm not being paid for my position like i was in prior months. Wes is right that this is not ideal time to be short. Daytrading on the 1% drop would have worked, but I am longer term. 2 years from now, VXX will be at $30 - POST 4-1 SPLIT. That's my trade - patience.
I am not as smart as others, covering on the dips and shorting the peaks. I knew the conditions were not ideal for shorting at 15.80 VIX and futures barely in contango last week. But I made so much $$$ on this I was loathe to cover. so I let it ride. I let it ride all the way to 35.80, and my position size on calls got too big. I should have "called the top" at 35.80, because that is precisely where I let some of my stuff go, for tax-loss and risk mgmgnt purposes. Just a fraction of my position but should have just ridden it all, its now flat for the day.
The fiscal cliff is NOT over. This is just a foretaste of the speed of the drop when/if it happens. but its only a 50/05 chance prior to end of year and there is always the next issue/problem. The spike to $35 was a foretaste IF we get a mess. but political grandstanding does NOT mean depression awaits.
" It does not matter when you get in, you still make the same amount of money up to 100%. "
Exactly so - its not 'how far did it fall?' its "what are the risks that could send it up again?"
Because with VXX its all about "HOW MUCH PAIN CAN YOU TAKE ALONG THE WAY?" Eventually shorts win, but today was a fine reminder of the pain that can happen along the way.
I am out of my short but that is the thing about a short my friend. It does not matter when you get in, you still make the same amount of money up to 100%. Sad I read these things. I personally feel there is more upside for VXX. Not the time to short for me, but I will be in soon enough and chuckling.