Bull or Bust

a bull's view

SUNDAY, OCTOBER 28, 2018

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…

WHAT NEXT?

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.

Stock and Option Trading