Friday, April 9, 2010

Closed out Short Euro Position + A mistake

The short Euro position worked a lot quicker than I thought it would.  I got in this position solely as a technical trade noting that the Euro was in a $1.35 to $1.32 range, credit goes to hedgeye.com.  I closed out the position yesterday at $1.3363 for a gain of $120 ($1.3483 - $1.3363 = $0.012).  I am still long the Australian dollar and I think that is becoming a long-term hold, at least until the US significantly raises interest rates.  I think I will short the Euro again if it reaches the top of its range.

I also made a mistake yesterday.  I don't really know why I did this, I think I just thought it sounded cool or something.  I bought 100 shares of VXX at $20.53 yesterday morning.  I ended up selling out of the position a couple hours later at $19.96.  Including commissions this mistake cost me $67.  This was put on as a hedge, but still very dumb.  I hadn't seen the retails number when I did it, DUMB.  Clearly, the VIX is very low right now at 16.48 and it will go up at some point in the coming weeks, but you can't make money off that, if you take a look at calls and puts on the VIX this is clearly apparent.  It is expected that the VIX go up, so the forward month futures that VXX buys are probably priced at around 19 or 20 even while the VIX currently stands at 16-17.  I should never have put money into a product that I didn't understand fully (VXX).  Since ThinkOrSwim does not support VIX futures I have been unable to find quotes of the VX futures contracts, but I'm 99.9% sure my hypothesis regarding these futures prices is correct.

Looks like we're due for another strong open this morning.

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