Week 4

Week 4:
Dec 7-Dec 11, 2009
$3950 -> $2600 (-34%)


Week 4's results inch me closer to turning into a trading statistic. One of the vast majority who eventually fail/go bust. It's sad because you can basically do many things right, but not quite right enough, and get screwed in the end. It's just that with options trading, such tendencies become amplified and play out on a shorter time frame. That is, a bad trader who happens to trade say mutual funds will eventually wither away, but take a much longer time frame to do so (say years as opposed to weeks). Maybe this gives this individual more time to recuperate, or perhaps fool the person into thinking they're doing okay. At least options smacks you in the face and might be a greater instigator of change.

However, I seem to be aware of my shortcomings, and I believe that knowledge will eventually turn my current gloom into a retrospective smile one day. Perhaps that makes me a dogged, optimistic fool in some ways, but some would call it confidence (foolish confidence is known to be necessary to keep up in certain areas as entrepreneurship and groundbreaking scientific research).

To recollect a painful week, I initially bought AMZN calls on Tuesday, but it tanked a bit, stabilized, and I thought I'd exit for a change in an attempt to cut my losses short (-$500 or so). However, I've been telling myself that my analysis has been correct nearly every time, so I should make money if I would just hold on and let my expectation play out. Sure enough, it recovered the next day and would have actually made me money. So this time I've tried something different - holding on to my next position over the weekend, which were GOOG 580 puts. Unfortunately, volatility has dried up so much that my options are tanking in spite of GOOG being a few points lower than where I purchased the puts! Next week is expiration week, so I need to be careful about selling out early even if it's a significant loss. Oh well...maybe it's time to actually reduce my position size like I had been saying earlier. Live and learn, live and learn...