Save me from myself

Discussion in 'Trading' started by DennisR, Apr 10, 2008.

  1. DennisR


    I'm an idiot and i need advice. I'm a fairly new options trader (about a year). I was making good money selling iron condors on the indexes, but in Jan I almost wiped out my account. I re-evaluated my strategy and started trading the VIX almost exclusively. I made back all my money and then some. I know I have way too much risk but I've been making good money at work and decided i would take big risk to try and double up. After doubling (which i figured would be no prob lol) i would get way more conservative and protect my account.

    Anyway I'm looking like I'm about to be cut in half by april expiration and was hoping for some advice. I've been buying VIX calls when we fall below 10dma. I bought april 27.5 calls at $1.30, doubled down at .60 and tripled down at .15. Now I have 1 week till worthless and I don't know what i should do. I was making a big bet on market tanking after earnings, which may still happen, but I'm running out of time. My account will be cut in half if I let expire, and my break even is .68c on the april 27.5 calls.

    I'm just a blue collar guy who works in construction and stuck my neck out to try and make some money. I'm not going to go hungry or hate myself if i lose it all. If everyone wants to flame me and make fun of me fine. I took a risk and now I realize it was too big. At the least I learned a lesson and will try and learn as much as i can to become profitable. I'm asking for advice from people more qualified than me to figure out what I should do.

  2. Bowgett


    Sell half. If market tanks you will make money on the half that you have and if maket rallies you still got back some money instead of losing it all.
  3. The 'problem' when someone doubles-down or triples-down whatever trade they're currently in, is actually several things often go wrong and cause the trader to just blow out.
    1. You lose objectivity of the trade and start concentrating on every tick.
    2. You have WAY too much exposure to ONE security/contract.
    3. You've got nothing left and begin to 'hope' things go your way.
    I'm sure there are other no-no's to this kind of trading but from my experience (just about every trader has done this) it's an idea you'll regret and in the long run learn the hard way not to get into.

    I'm not an options guy, so could't tell you what to do on this trade, but good luck to you in the future.
  4. Yup, sell half and hope for the best this time around.

    And stop gambling....

    If you don't know what you should do, then that's rather a serious problem I will say....

    Develop some real strategy that include an exit plan and preferably don't require repeatedly averaging down.
  5. Take half of the trade and let the rest ride no matter the outcome sir.
  6. Are you not putting too much on a single position ?

    Why did you double down, then triple down ?

    What does your trading plan suggest you do on this trade?

    At what point does your plan force you out of a position?
  7. DennisR


    It's funny. I guess in a round about way I am learning at least. I stood to blow out my full account in Jan, stand to blow out half my account in April, and one can only assume 25% in July. Lol.

    I have pretty bad luck market-wise even if i don't trade like an idiot. I first got in the market after college in 2000. Blew out when tech bubble burst and realized i need way more money to be profitable due to commissions. Now I make enough money to have decent starting capital and credit crisis comes along. You can't make this stuff up.
  8. DennisR


    I've been trading Vix since jan. Whenever it fell below 10dma I buy calls. I only spend 1/3 of what i was willing to put into position to allow for the double and triple down. I've never been forced out because this has worked big time since Jan. I wouldn't be scared if i had may calls but we hit 10dma right before the 2 week deadline i have for front month options.
  9. You don't have bad luck, you just don't know what you're doing. Take the time to figure it out. If you don't personally take responsibility you'll never learn.
  10. DennisR


    You're right that i don't know what i'm doing but can you honestly pick 2 worse times for a new trader to enter the market in the last decade?
    #10     Apr 10, 2008