The
VIX is the
volatility index which
measures fear in the market. When the market goes down the
VIX goes up.I heard that when the 2001 crash came to an end the
VIX was at 51. This told me anything after 50 would be a good shorting
opportunity and I should buy some puts. I bought more that the
standard 1 lot. I bought 6 contracts with the Idea that I would still keep a good
patron of my account in cash so I the price
dropped I could get back in and ride the wave back up. The
mistake I made on the trade Is I went to large. I broke all money management rules and I paid the price. When II first got in the trade I was up oer $1500 I go greedy and wanted more. The market
crashed and the
VIX went to $74 so much for the 2001 highs. I was short at $50 when I went in to buy to to average my cost down the
following morning the market kept going down and scared me out of the trade. As it always happens in AM trading the market recovered shortly after the sale, This is how it looked
Bought 6 Nov 35 VIX Puts @ 5 + 14.95 commission =$3014.95
Bought 4 Nov 35 VIX Puts @3.40+14.95 commission=$1374.95
Sold 10 November 35 VIX Puts @ 3.00+14.95 commissions= $2985.00
Total Loss $1403.00 ouch!!!
The lesson here is if you are a rookie like I am trade 1 lots this whole account 10 lot shit is for the big guys. My new goal is to have 10 winners in a row then I will up it to 2 lots.
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