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26 Mar

My TVIX Nightmare

by

Have you ever woke up from a nightmare thanking the heavens it was only a dream? I know I have, some pretty wild nightmares too but unfortunately the true story I’m about to tell is not a dream and haunts me every minute I’m awake. Like a nightmare, this true story is scary and disconnected. I’m writing this hoping I can help some other undisciplined trader from making a huge mistake like I have.

It starts back in the end of January when I sold my shares of LGF for about $3,000 profit. Originally I told my subscribers I’d hold LGF until the middle of March when the Hunger Games launched but sensed a shift in the market might be coming and swapped out my LGF for a hedge against the market with TVIX. This is 2x the VIX for anyone new. I’d hoped to lock in my profit on LGF and buy it back lower but as you can see, LGF never went lower. I was so convinced the VIX was going to climb I picked up a total of 5,000 shares at an average of $18.50. The market, however, had other plans and continued to trend up generally sending the VIX lower and TVIX with it. There was no fear in the market, my timing was off.

Now in my normal swing trade strategy I’m only looking for 5-10% profits with 1-4 day holds and tight stop losses. But with TVIX which is an ETN and not a stock, I came up with a different strategy telling subscribers I didn’t care what it did, I was holding until it was at $24-$30. I was going for a big score and I wont lie, as a newsletter guru the big scores sell more newsletters than the base hits. Ironically, I built my newsletter from a handful of subscribers a year ago to 700 where I am now, all on on base hits and now we have our first glaring flaw. The nightmare begins!!!

Now early on in the trade I remember being down $15,000 or about $3 per share. In my normal swing trade strategy I’d throw up if I was down $1,000 let alone $15,000. But I stuck to my plan using TVIX as a hedge against my swing trades and as the market continued to climb higher each day, fear lower and I traded stocks actively trying hard to ignore the big loss snowballing in my account. The nightmare continues!!!

But then the tide turned and TVIX ran hard above $21 in early February which is right around when I added size. I remember being up well over $10,000 and everyone in chat was going nuts, our timing had been off in the first few weeks but we were now in a full on squeeze and I could taste the $24-$30 range, I honestly thought it was coming the next day. A friend suggested I lock it in but I had a hunch I would score a big one. As you can imagine, the market was right back up the next day sending TVIX back down to $16 and that was the first time I regretted not selling. I was down $15,000 living a nightmare only for it to swing to over $10,000 profit and I didn’t lock it in because I wanted the big score?! Just four days later I was given a second chance though when it hit the mid $20’s again putting me up over $10,000 profit but I got greedy despite a friend suggesting I lock it in… the nightmare continued.

At this point I was not given another chance to be a hero, down big twice and up big twice I would not get another chance to be up big or up at all for that matter. I remember being down about $10,000-$15,000 for days on end waiting for the VIX to climb and then the bad news hit, seriously it’s an ETN and I got caught in bad news. Like a punch in the gut, new share creation of TVIX was halted by CS and the 2x VIX instrument broke. However, despite the market climbing and the VIX heading lower TVIX seemed to hold its premium so I gambled. I honestly didn’t know what to make of the new share creation halt, it didn’t seem to be hurting me at the time, but in hindsight should have simply sold right away since the tool was no longer the same. The nightmare is getting worse!!!

The rest is history, rumored leaked that CS would start creating new shares again and the free fall was on and premium lost. Around $8 per share I got a margin call on the smaller portfolio I trade and took a $19, 576 loss on those 2,00o shares. Right now I’m sitting on 3,000 shares down $38,000. It took me 1 year and about 600 verified trades to build $100,000 in profits swing trading stocks and I managed to give back almost $20,000 realized and as of today another $38,000 unrealized on one ETN hedge against the market. If I were to realize this loss tomorrow I’m still up $42,000 in 12 months of hard work but it sure feels like I’ve made nothing after this. That’s my TVIX nightmare and it’s clearly not over yet.

The lesson I hope you learn is that buy and hold (HOPE) does not work, I know this, teach this, but did not apply this. As for the 3,000 shares, at this point since the premium is gone and CS is issuing shares again I’ll watch to see if it’s working 2x the VIX again, if yes, maybe I’ll finally get my opportunity to end this nightmare.

To be continued…

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15 Comments

  1. kelvo

    good traders tell of their good trades, and hide the bad ones, great traders face up to the bad ones,too.
    your a great trader, your honesty and integrity shines through any bad decisions you’ve made, i’ve known you for over a year, now, and you’ve never shy’d away from mistakes, and like any human, you’ve made a few, jeez, haven’t we all.
    you’ll soon get it back, and then some, but if i see you let a trade go sour again, i’ll email you every 5 minutes, untill you see sense!!!!
    keep up the good work.
    kind regards
    kelvo

    Reply
  2. Kashtrader

    Honesty, Integrity = Jason Bond

    Kashtrader

    Reply
  3. Durrell

    Appreciate your candor…Send me an email about your services…I read about Jesse Livermore…who made millions in the market but also lost millions and in the end committed sucide….cheers and good luck next time.

    Reply
  4. Clarence Bugayong

    I’m a new subscriber to your newsletter and I feel your nightmare on tvix everyday since losing to a biotech shell company called Viragen VRA was the symbol, this was year’s and year’s ago… Fast forward to today, I found your site and I have actually been doing your trading format the past couple of years but with minimum profits. After viewing your webinars and teaching videos, everything I have been learning along with all my costly mistakes all of a sudden just clicked. I am so grateful I stumbled on your site when I needed it the most. You are a stand up individual and my hat goes off to you. Mistakes are meant to happen so we can learn and prosper from it. Time to move on my good man… God Speed!!!

    Reply
  5. Frank Kolnacki

    Thanks for this lesson from first hand experience. The next trade will always be out there waiting. It’s how we learn from the results of that trade that determines our growth. This is just an obstacle that you will overcome in your trading journey. Best of luck and thanks for all you put out there for us to learn from.
    Frank

    Reply
  6. Joe

    Thanks for posting the commentary on this. I am not a fan of Jason Bond but credit is given for not hiding from this. Admitting a mistake shows character. I certainly wouldn’t want my worst trade ever blasted all over the Internet (and it isn’t lol).

    Bond has money and he could just pack up shop and quit but he is sticking it out like a man. I am guessing he will be just fine with his stacks of cash regardless of this misstep.

    Reply
  7. Rhondag

    Jason, I’m right there with you. I’m counting on your close monitoring of the every changing TVIX to help me, you and all the others still in TVIX to get out of this one with little or no loss. I hope the old saying “what goes down MUST go back up” applies to TVIX. If so, maybe you’ll end up making back the $20K you loss! Wouldn’t that be a sweet reward for your honesty? Keep moving forward and only look back to make sure the rest of us are still moving forward with you. You have my respect. MY losses are due to my OWN lack of understanding and I credit YOU for all the gains I HAVE made and for NONE of the losses. They were all MY doing. We can only get better as we practice in the school of hard knocks better known as swing/day trading!

    Reply
  8. KENSWIFT

    Appreciate the honesty. Looks like it rebounded a bit today. Whenever I get greedy I get screwed. Take profits. It’s so cliche but so friggin true. Your a good trader Jason, you will make it back.

    Reply
  9. Dave Troutman

    Seems like I’ve been with your service for such a long time, although it’s only a little less than a year now. I’ve learned a lot, as you told me I would, and I’ve even ended up applying it, most of the time. Yeah, TVIX is a real stinker. I’m in it just as you, and some others are, but, you know, I’m still confident. I’m confident that we’ll find some way to get out of this thing WITHOUT losing our shirts in the process. I’m confident because I’ve learned, from you, that there is always another trade. There is always another dollar to be made with the proper due dilligence applied. I don’t know if we’ll be able to salvage anything fromTVIX, but I’m certain that we’ll find enough future trades to make up for what we lose, plus. I know you’ll come up with the best solution possible. I’ve sat in front of my computer and watched you make magic happen more than once. I have no reason to believe you won’t do it again. So you were teased by the promise of the “big hit”, so what? You’re human just like the rest of us. So, let’s get on with it! What’s the next trade?

    Reply
    • Jason Bond

      Thanks Dave, I mean that from the bottom of my heart. We have an awesome core group of people and I couldn’t be more excited about the direction of this group. I agree 100%, what’s the next LGF is all that matters now.

      Reply
  10. Michael

    Aloha Jason:

    The TVIX was a real stinker. Profesisonal traders were also totally surprised. Some brokers, institutions, and professional trading sites are now recommending that their clients either sell Vix related ETFs or not consider buying them. Finviz, Motley Fool, Barclays, Barrons, etc.

    I can sense from watching your video lessons and webinars that you must have been a fantastic public school teacher. The school district that you were employed by clearly lost a vaulable asset when you decided to puruse your teaching passion in an area that also appears to be your favorite hobby, i.e. trading stocks.

    I would agree with Dave. Even the best, like yourself make mistakes. It takes a great teacher to admit a mistake.

    Thank care and show your students the next LGF!

    Michael Marr

    Reply
    • Jason Bond

      Thank you for the kind words Michael, it’s really appreciated. I learned a lot from that trade and it’s a lesson I’ll never forget. Keep in touch.

      Reply
  11. Paul Dandro

    I own 20000 shares of tvix im in bed with this puppy forever I can only hope that the debt ceiling europe unemployment will put the tvix back in action I dont have a choice but to wait i am confident that in the long term approx 36 months it could hit 100 or more per share there are still alot of problems out there. e-mail me your comments on that and dont forget when the tvix starts to roll it is full velocity it can make up ground regular stocks can only dream of.

    Reply
    • Dave Snell

      Paul, tvix has done a reverse split and isn’t ever getting anywhere close to the price that you paid. Look at the chart for the market correction in October 2014..as you can see tvix had an awesome run but it only managed 2pts.

      Reply
  12. Rics

    I too have experienced with tvix nightmare. I have lost 3k in less than a minute. I did two trades. It is like throwing my flesh to a bunch sharks.

    Reply

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