The Oct VIX options still have 8 days to live and I expect the market to have at least a small correction in the next couple of days, so I decided to cash out of my VIX option spread and take my profits. Tried debit orders to close out the position, starting at .08. It finally went at .11. At fill time the VIX 27.5 had a .20/.25 bid/ask, and the 30 was at 10/20. The actual fill prices were .24 and .13 respectively.
Given the volatility of volatility (which you should understand if you are going to trade VIX options) I am wondering if in the future, in similar circumstances, if I should take larger positions and plan a profit exit point that doesn't try to wring so much of the potential profit out of the position. In this case I only left .11/.75 -- 15% on the table, but exposed myself to substantial risk that the market would go against me.
Monday, October 12, 2009
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