Exactly one year ago on Sep 28, I wrote my first blog regarding trading on volatility of the stock market via ETF, VXX, which tracks the volatility index, VIX. At that time, the VIX was at around 25 or so. So how has this trading idea being doing one year later?
Well, it did not do very well for the most part of the past year. As always, I was a bit too early with my idea. I thought the market was too high one year ago and investors were too complacent then, which meant low volatility. The market went on even much higher since last Sept and VIX went down much lower during the next 9-10 months or so. VIX dropped to as low as about 12, which had not been seen for many years, meaning investors were just extremely complacent and felt the market would only keep going up. While I looked like being wrong & stupid all along, I was just not convinced that I was actually wrong. I was stubborn, sort of speaking. As I wrote several times, I added more VXX positions to bet that the market would eventually become rational, which would bring down the market to shake out those complacent investors. It did and everything is history by now I assume. As I said before, the ultimate winner will be the last one to smile and I’m smiling now! The following are the 2 VXX positions I have and still open, with a different strike price and both mature in Jan 2013. They are both doing very well for me in this terrible market for general investors. That’s the beauty of being a contrarian against the herds. I hope you have followed me for doing the same.
No comments:
Post a Comment