Eric Peterson

Eric Peterson
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  • VIX - Options Volatility Market Sonar: Thursday Recap  [View article]
    Hah! I've been trading options for many years, but never heard the term "call stupid". I thought you were calling the trader stupid for putting on that position. :)
    Jan 18, 2013. 04:33 PM | Likes Like |Link to Comment
  • VIX ETP Performance In 2012  [View article]
    Don't hold VXX more than a few days. Never hold it longer and pray. A sure way to lose money. It loses money while the VIX index stays level.

    The inverse funds such as XIV and ZIV make money while the VIX stays level. You can hold them long-term, riding out VIX spikes and they make news highs when the VIX goes back down to where you bought.
    Jan 11, 2013. 06:45 PM | 1 Like Like |Link to Comment
  • A Volatility Play With Significant Upside Should We Go Off The Fiscal Cliff  [View article]
    "made money on decembers, rolled over to the jans"

    Ok, exactly how much did you make on December? December calls expired many days ago when the VIX was much lower than it is now.

    And entry prices for January, so we can see if you make a profit there?
    Dec 29, 2012. 11:53 AM | Likes Like |Link to Comment
  • The Only Way To Successfully Use Options Over The Long Term  [View article]
    This author seems to always focus on the probability of a winning trade, and spends little time talking about the profit for a winning trade or loss for a losing trade. The payback is just as important. It's no strategy at all to just do trades that have an 85% chances of success. It could be more profitable to do trades that have a 50% chance of success or even less. It all depends on the paybacks.

    If I pay $1 to bet on rolling one die and guessing which number it will be (from 1 to 6), then my chances of success are 16.7%. That doesn't mean it's a bad bet. It depends on the payback. If a winning guess gets me $6, then I won't waste my time. If a winning guess gets me $7, then I'm playing that bet as many times as I can.
    Dec 24, 2012. 06:04 AM | Likes Like |Link to Comment
  • The Only Way To Successfully Use Options Over The Long Term  [View article]
    Bobb20: Yes, that's correct. 85% chance of profit. But the critical point is, the losses (which happen only 15% of the time) are much larger than the profits. One loss can cancel out many small profits. Just because you win on 85% of your trades, doesn't mean you make a profit. This is the key point which the author glosses over way too much, in my opinion.

    (I have been selling options for years. I never buy options).
    Dec 23, 2012. 08:34 PM | Likes Like |Link to Comment
  • The Only Way To Successfully Use Options Over The Long Term  [View article]
    Nice article. But I think one sentence is misleading:

    "I was down to a little more than $30 at one point, before the probability gods began to finally work in my favor."

    Just because you are down, after playing a lot of bets with 50-50 odds, doesn't mean the odds are now in your favor. The expected long-term result of more 50-50 bets, after being down to $30 from a $100 start, is to end up at $30. The odds have not improved. They are still 50-50.

    You often quote the 85% - 15% probability of success. But if a win gets you $15 and a loss loses you $85, then the expected long-term result of many bets is still zero profit. Just because you can modify the bet before expiration, that doesn't improve the expected value. There must be some inefficiency in the market that you can exploit, if you want to profit. For example, maybe the wins are more than $15 because the current prices of the options you want to sell have been bid up excessively by inexperienced traders.
    Dec 22, 2012. 11:21 AM | Likes Like |Link to Comment
  • UVXY: How One Can Profit From This VIX ETF  [View article]
    If you can track the VIX with your "tool", and it doesn't lose value over time while the VIX stays flat, then you will be a billionaire. Congratulations.

    Because all you have to do is be long your "tool" and be short an ETF such as VXX. Guaranteed free money. Let us know when you make your first billion!
    Dec 20, 2012. 11:47 AM | 4 Likes Like |Link to Comment
  • UVXY: How One Can Profit From This VIX ETF  [View article]
    "If an ETF/ETN emerges that tracks the VIX please let me know."

    hedgetown, it will NEVER happen. Period. If you don't want to understand the very clear explanations why, then that's fine.
    Dec 20, 2012. 06:53 AM | Likes Like |Link to Comment
  • UVXY: How One Can Profit From This VIX ETF  [View article]
    hedgetown, that is not possible. For the SPY, you just buy all the stocks in the SP500 and you have an ETF. For the Dow, buy all the stocks in the Dow. The VIX is an abstract number calculated from the premiums of options on the SP500. You can't buy an abstract number and make an ETF out of it. There is no underlying asset to buy. The closest thing is the VIX futures contracts, which is what these ETFs buy. But the VIX futures go down every month because of contango. That's why these ETFs lose lots of money.
    Dec 19, 2012. 06:02 AM | Likes Like |Link to Comment
  • How Much Would You Pay To Avoid Volatility?  [View instapost]
    Untrusting, I think you are exaggerating a little when you say "It is precisely these types of securities that are destroying investor confidence."

    I doubt that more than 1% of all retail investors have ever purchased (or sold) a volatility ETN. I have no data, but the number is probably closer to one in one thousand investors. Such relatively unknown products hardly "destroy investor confidence" in general.

    They may be horrible products, but that's not the point I'm arguing.
    Dec 17, 2012. 09:59 AM | 1 Like Like |Link to Comment
  • How Have Analysts Performed?  [View article]
    Very interesting. But if you broke it down into 5 groups instead of 10, then the worst-rated 20% of stocks DID perform the worst YTD.
    Dec 13, 2012. 09:02 AM | Likes Like |Link to Comment
  • VIX And VXX Fall As The Markets Fall: Confused?  [View article]
    NickyCee: You wrote your comment on November 9, when CVOL closed at $4.21. Now it's $2.80. How does it feel to say goodbye to 33% of your money in a month?

    Long volatility funds should NEVER be used as "investments". They are only for short-term trading.
    Dec 13, 2012. 04:55 AM | Likes Like |Link to Comment
  • Gold's 12-Year Run May Finally Be Over  [View article]
    If all these banks are predicting the gold bull market is over, then I'm buying! Since when has a consensus opinion of banks and brokerages been correct?
    Dec 11, 2012. 06:18 PM | 2 Likes Like |Link to Comment
  • Tax Share By Bracket: An Update  [View article]
    "The top 5% making $162K ... top 10% $17K ... top 25% $69K"

    The $17k has to be a typo. Maybe $107k?
    Dec 6, 2012. 05:04 AM | 1 Like Like |Link to Comment
  • 3 Reasons Why Buying 30-Year U.S. Treasury Bonds Is A Bad Idea  [View article]
    People have been calling the end of the bull market in long bonds for years, and giving very logical reasons why. They have all been wrong so far. Maybe this time it really is the end, but a few logical reasons doesn't prove it, any more than they did the past few years.
    Dec 6, 2012. 04:39 AM | Likes Like |Link to Comment