Recently I’ve been trying to learn how to trade vertical spreads. What’s one of my first trades to learn spreads? My smooth brain decided to sell some put spreads at the peak of the recent jump on the VIX.

Not only am I trying to trade a new option strategy I don’t fully understand, I am also trading a product I don’t fully understand. I can barley explain what the VIX means let alone trading the index. Alongside all this I was also trading the leveraged VIX ETF, UVXY .

Why do I make such stupid mistakes like this? It’s a combination of extreme greed and FOMO (Fear of Missing Out). I was watching friends of mine making gains on volatility and I decided to try and join in on the fun.

Now, if I had just bought a call debit spread I would have been fine. My loss would have been a lot easier to handle and the risk to reward ratio might actually be worth it. Instead, I decided to sell put credit spreads on UVXY.

This type of trade has higher odds of being correct (if I was trading a normal stock and not volatility) so you collect premium and have a higher max loss in comparison to a debit spread. Now, this would be a safe trade on a normal stock, but I sold puts on volatility at the highest point.

So now the next day after volatility collapses, my puts are now fairly deep in the money. I hit my max loss which was over 5x the premium I originally collected.

Why do I make such stupid decisions? I get greedy and decide to FOMO into trades that I don’t even understand. Going forward I need yo pull this smooth ape brain away from the decision making process and follow the rules of my system.

We are all a bunch of emotional apes at the end of the day. We are our own worst enemy when it comes to keeping our profits trading. In one quick decision I made a terrible risk for reward trade on a risky product I didn’t fully understand. I need to push my emotional brain out of the decision making process and manage to get into a state of flow in the future.