XIV dropped from 87 to 83.60 in a matter of hours. I purchased on the rebound at 78. Expecting to get out in a few weeks? at 93. Should have taken the "early bird" trade.
BUT, some blame is to be put on the yahoo finance app. While the XIV quotes are accurate, VIX quotes seem to be delayed. So in the heat of the action, I was seeing VIX 13.56 when it was over 14 and climbing to 15...so I missed an ideal entry. Didn't discover the 15 factor until it was too late.
Vix seems to have led Vix futures price action today. It started dropping precipitously before the futures became to recover. This was actually the cue which caused me to trade "at all costs" and move up my original entry target from 76 to 78...only submitted one trade and it was at 78.
The other problem with my trading: I've been trying to follow that rule of 4 thirds. But these events are intra-day these days, and they are dramatic. That rule is meant to cost average over several days, so it doesn't work. The one thing I could do is the early bird trade, which I haven't done. For instance, when it was falling and falling, I could have done an early bird third at 75. Then once it had recovered, at 78 gone for the rest of cash plus margin with the confidence that it was rising, and perhaps protecting with a stop afterwards. Early bird gets the worm, and in this business, no risk = no reward. Should have totally put in all the cash at least. I put in 1/2 because thought it could get worse in the coming days and wanted to be able to capitalize on that in case.
One other interesting thing to note: not only does interactive brokers have the cheapest commissions for these types of trades (essentially $1), it also has an option for GTC types of "fill outside of regular trading hours" which can allow the trade to get the best value...and I am going to utilize this.
For this strategy, it would be worthwhile to get an interactive brokers account to manage all the other accounts. The IB account would also allow for forex trades, all sorts of complex instruments. The only thing it's not good for are options trades. eOption is by far the best for these. But then again, don't have a working and worthwhile options earnings trading system yet. eOption, however, would allow for options fills outside of extended hours, which might be the solution to the loss problems with these trades...have an automatic stop for if the stock dips below the unprotected strike to buy back at margin. IB would certainly be cheapest for testing these strategies at $1/option. And maybe it'd get better fills. So it might be worth the scaling costs
Back to work on getting truck ready for trip!
