I have not made a post in several months due to being incredibly busy with my primary job, but with recent market volatility I find myself redirecting my attention back.
Shortly after labor day back in September I was up 17% for the year and happy. I debated on cashing out numerous times, but decided to hold my AT&T options through earnings because I believe in their story. Unfortunately, the market selloff hit at just the right time (days before earnings) and then earnings were good, but not great and the market punished AT&T badly. I lost $130,000 in a week causing significant stress and anxiety, but I held strong.
Luckily, I had purchased 350 (35,000 shares worth) of the Nov 2 31 strike put option a couple of days before earnings and cleared 450% gain ($25,000 profit) before selling too soon. Had I simply held said puts until Friday I would have only lost $60,000 or so. I am not mad I was wrong or AT&T went down I am mad because I told myself to hold those puts until Monday and simply didn’t listen. That pissed me off.
This is an example of poor discipline. Did I have the right trade? Yes. Did I execute it correctly? Yes. Where I failed was with the discipline to listen to myself, know what needs to be done and stick with it. With this market I told myself before earnings no matter what don’t touch anything until Monday. Give it three (3) days. I did not do so and it cost me…
Well, my AT&T call options are still worth $70,000 and they do not expire until January 2020 (I rolled my June 2019’s to January 2020 to give myself more time). I plan to hold them and wait. Pray AT&T recovers to $33.50 which happens to be the price I believe it is worth. Otherwise, for now I am completely in cash and will sit back and watch this market until the new year before opening new positions.
In the mean time, this creates a great opportunity to update this site and write some new articles. Sure, I went from being up 17% to down 30% and that’s a significant loss, but it was my own fault and I learned a lot. It all comes down to discipline and something I have noticed many times over the years: cash out on or before Labor Day no excuses! I have NEVER made any money after Labor Day and typically burn gains trying to do so. Make your money between Jan and September and be done for the holidays.