Positions Can Be Distractions Too…

• Posted by chicagosean
• on September 7th, 2011

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In the Minimalist Trader Framework, we’ve covered the problems that distractions can cause in my trading and I’ve taken efforts to minimize them (eliminating a TV from my office, for instance).

A new form of distraction has recently re-introduced itself to me… a committed market position.

For people who follow me on StockTwits (@chicagosean), they know that in early August when the markets skidded into a tailspin, I attempted to fade the hysteria by selling volatility via call spreads in $VXX. Well, I’m more or less still in the position. I’m continually adjusting it to give myself the best chance to finally profit once this thing (inevitably?) turns around.

 

I’m liking my position now. And I’m liking my game plan going forward.

But what I realized today is that while I’ve been totally engrossed in managing this position for my portfolio, I’ve missed some great opportunities in other areas. The volatility in the markets has been tremendous of late and where there is chaos, there is opportunity.

For instance, I’ve had my eye on several good dividend paying stocks that I’ve been looking for good entries on. These entry opportunities came and went during the recent sell off and I completely missed them due to my laser-like focus on my $VXX position.

I’m optimistic that my efforts will pay off on this particular play, but it kills me that I’ve been so distracted to miss opportunities that I’d been waiting for.

Of course, what this is really telling me is that my $VXX position is too large. Which is both true and untrue. The total risk to my portfolio is defined and one that I’m comfortable with. But what keeps me most interested is the big possible payoff if this plays out like I hope it will (expect it to). Perhaps I’ve put too much pressure on one position/play to make my quarter/year. A debate for another day.

Focus!

Related:

The Minimalist Trader: Cable Financial News

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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