LDOS 02/18/2022 110.00 Call (unofficial play)

[jimwill]

I purchased the LDOS 02/18/2022 110.00 Call (unofficial play) at $2.45. With four months until expiration, I'm wondering at what point I should cut my losses. Any thoughts?

Thanks,
Jim

[AstuteShift]

Depends on your risk tolerance, weekly charts poised for a nice upside

I’m in these options as well, however I’m not worried.

Remember, options are not for the faint of heart. It’s either rockets to hell or monster greens.

[jimwill]

I’m in these options as well, however I’m not worried.

When an option isn't doing well, do you let it expire worthless or do you try to minimize the loss?

[SOL]

Depends on your risk tolerance, weekly charts poised for a nice upside

I’m in these options as well, however I’m not worried.

Remember, options are not for the faint of heart. It’s either rockets to hell or monster greens.

I bought options on 6 stocks that looked great, plus I purchased the stocks. Well, I lost money on 4 options ranging from 60 to 90 per cent, even though the stocks traded higher. The reason. I did not have enough time premium left. However, on the two remaining options, I banked monster gains, 500 and 700percent so that made up for all the other pain and plenty more. The moral of the story as Astute has stated is that options trading is not for everyone. You need to understand that you will lose from time to time. If you have a game plan and stick to it then you can come out ahead in the long run. Options need extreme patience and discipline. Those that survive in the options markets join the rank of the elite.

[AstuteShift]

You must have a game plan


Percentage loss set (50% and sell for example)
Time limit set (3 months or less sell)
Portfolio portion, 1-5 percent of total portfolio into options

Personally, I go with the portfolio game plan since I’ve been trading options for a long time. I’m okay with small losing battles since the winners are big to cover up

https://youtu.be/BDeGSXVDihk

Options trading is like this song, intense. You are going against the sharks so you must have that killer instinct while not caring to lose sometimes since the end result is you winning the war.

[Yodean]

Portfolio portion, 1-5 percent of total portfolio into options

For me, this is the most important part of options trading - keep the allocation to options very low, until you've proven to yourself that you have a winning track record with options (whether your own or following those of others, or a combination of the two) that beats regular position trades by a significant margin, over at least a year or two (preferably more).

I know several deep multi-millionaires - and I will add unabashedly that includes yours truly - that accumulated wealth in the markets (not by inheritance, lottery, or divorce) to this level barely knowing anything about options. I've started playing with options again a little bit more - mostly under T.I.'s guidance - as much to further advance my investing/trading knowledge and skills as opposed to expectations of tremendous gains.

Other challenges with options trading, beside the ones mentioned by others already, include the psychological and time costs. For example, let's say you average an annual rate of return of +15% overall with positions trading. You compare that with a +17% average annual return of your options portfolio. However, you have to spend a lot more of your time on your options portfolio tracking all the volatile price movements, always trying to get the best price, worrying about expiry, getting stressed out, etc.

For some, that +2% annual rate of return may not be worth the increased psychological toll on one's health, or the extra time they have to spend monitoring the options portfolio.

[AstuteShift]

One way to Minimize the time penalty is also to purchase leaps if the stock provides also. Theta decay will be minimal at best

However in option land, the safer the strategy the less gains. No exceptions to this rule.

Also best time to play options is during market panic by the masses, the gains are legendary


A lot of option traders are nothing but sardines, they sell options and claim to win 70/80 percent of the time yet they only barely beat the market

What they don’t realize is, it’s not about winning all the time but rather gaining capital. You can lose 5 in a row but one big winner gains 10 or 15. Would you care then? Nope

[MarkD]

The general rules Sol and others with option experience provide is valuable. ANGI is a stock that TI listed months ago. Being slow trading this summer, I did a little research and identified AUG21 12P selling for a buck on August 4. Received a dollar for each share expecting the stock would be flat to up going into expiry. Then the stock dropped and I ended up with 2x the amount of shares TI would have me buy. A few years ago I would have closed the pot position early. Now, I release a lot of stock as it rachets up and have sold nearly all of the put stock betweeb $12 and $15. By not panicking my return on idle cash has averaged 20% in a few months. Smaller bets = less stress.

[bpcw]

Portfolio portion, 1-5 percent of total portfolio into options

For me, this is the most important part of options trading - keep the allocation to options very low, until you've proven to yourself that you have a winning track record with options (whether your own or following those of others, or a combination of the two) that beats regular position trades by a significant margin, over at least a year or two (preferably more).

I know several deep multi-millionaires - and I will add unabashedly that includes yours truly - that accumulated wealth in the markets (not by inheritance, lottery, or divorce) to this level barely knowing anything about options. I've started playing with options again a little bit more - mostly under T.I.'s guidance - as much to further advance my investing/trading knowledge and skills as opposed to expectations of tremendous gains.

Other challenges with options trading, beside the ones mentioned by others already, include the psychological and time costs. For example, let's say you average an annual rate of return of +15% overall with positions trading. You compare that with a +17% average annual return of your options portfolio. However, you have to spend a lot more of your time on your options portfolio tracking all the volatile price movements, always trying to get the best price, worrying about expiry, getting stressed out, etc.

For some, that +2% annual rate of return may not be worth the increased psychological toll on one's health, or the extra time they have to spend monitoring the options portfolio.

I wish people would talk in terms of percentages as it's all relative, if you started from 1k it would be far different than if you started from 100k or 1 million, congratulations on being a multimillionaire but if you started from $10 then I have to know your strategy, from 10 million, a bit less so!

This is why for me I haven't invested in options, because it would take too much time and effort when I feel the current strategy is yeilding a very good return for the simple lifestyle I enjoy! I think it's very important to communicate that one's investment style should match one's lifestyle, and that one should consider what should be the higher priorities in life.

I'm interested to know from you Yodean, why you have such an interest in accumulating more when you seem to have so much already, what drives you?

[Yodean]

I'm interested to know from you Yodean, why you have such an interest in accumulating more when you seem to have so much already, what drives you?

Lol, I'll try to keep this fairly short - something I am not very good at. Actually, who am I kidding - it's going to be long, painfully long.

My parents were immigrants but they had some money as my father was a successful entrepreneur in Taiwan and retired fairly early. Even back then (over 40+ years ago), there was a strong fear that the CCP was going to invade Taiwan. My parents, relative to their peers, were quite rebellious and independent thinkers so they took their three children and left Taiwan.

I grew up fairly comfortably in an upper-middle class kind of way, from a material perspective, but the relationship between my parents deteriorated to such an extent that divorce was discussed (more like yelling, screaming, the breaking of pots and glass, etc.) on an almost daily basis. For the most part, no one was hurt physically, but I was often afraid to bring friends or girls home in case they heard the constant disputes. Back then, in the Taiwanese culture, there was a lot of stigma attached to the idea of divorce.

As a whole, the first 18 years of my life were not particularly happy, but it was that unhappiness that drove me to do really well in school and sports, etc. I channeled most of my unhappy feelings into those areas as well as a few hobbies. My parents left me alone to do as I please as long as I did well in school, which I did, graduating as the top student in my class and also winning a bunch of awards along the way, including an annual province-wide English writing contest.

I wanted to get out as quickly as possible, and I knew for me, higher education was the clearest path. My parents, for all their faults, had a lot of respect for academic achievement, so I negotiated with them to support me financially in attending an Ivy League university, which is very expensive. The main stipulations were that I had to maintain honours standing and would eventually pay them back, conditions to which I readily agreed.

I ended up getting into the University of Pennsylvania (lol, Ivanka Trump and her father have ties to this institution, among others), and also did really well there. I graduated summa cum laude and got inducted into Phi Beta Kappa (top 3% of graduating class) as well as even winning the first-year Physics award, ironically, and a few others.

During my time at Upenn, I became interested in medicine. Despite all the problems that modern medicine has inflicted upon the world, which have been well-documented in the T.I. forums, and are ongoing as we speak, I fell in love with the mainstream ideals of medicine, and so I pursued this path.

I enjoyed the rigors of constant learning and the intensity of the pre-med. competition, etc. Contrary to a lot of Asian parents, mine actually didn't push me into medicine. I think they thought I was going to become an engineer or computer scientist, lol.

And so I came back to Canada for medical school, residency, and a few subspecialty fellowships, etc., and eventually started my practice. Despite all the ups and downs, sleep deprivation, pimping, etc., it was all rather enjoyable, in a perverse kind of way. Basically, a part of me enjoyed meeting challenges, and conquering them, as well as getting crushed and failing miserably, then trying to get back up again.

In a lot of ways, traditional medical training is a lot like military training - I think Hemingway even wrote about this a bit - the training is designed to break you (all your filters, in T.I lingo) on every level, and rebuild you in a new way, in "their" image.

There is a lot about this process that is both wonderful and horrible.

I joke with my wife that she will always be my "mistress" or "2nd wife," as medicine would always be my first wife. Good and bad, the decades spent with my "1st wife" has forever altered how I view the world and its people. Seeing death, illness, aging, random terrible things happen to good people for inexplicable reasons, on an almost daily basis, has changed me, I would think.

I left my 1st wife - Ms. Medicine - at the end of December 2019 (ironically, right before cv19 appeared) on amicable terms. A lot of family and friends have asked me why I left, and if there were "deeper" reasons. There were a few superficial reasons, perhaps, but the main reason was that I had gotten bored. Simple as that. Or call it ennui.

On a practical level, I had "Fat FIREd" (Financial Independence Retire Early), despite starting with nothing (after all my loans were paid off to my parents), and my wife was supportive of my decision, which helped.

In all, if I include all the years from medical school, through residency, a few fellowships, as well as my own practice, that's over 20 yeas with Ms. Medicine. That's a pretty long relationship!

So for the past few years, some of that energy I was spending with Ms. Medicine is now spent with Ms. Investing. Also more time for sleep, different forms of physical and mental training, etc. Maintaining an active MD practice license so still do some pro bono research and clinical work, but it's on my terms and I choose the projects so it's nice.

My current love affair with Ms. Investing will probably end in about ten years, I would guess, likely earlier. At that point, I will likely switch to some sort of rote passive investing strategy that does not require a lot of time monitoring the markets - sector ETFs in specific asset allocations, rebalance once a quarter, that sort of thing.

My wife and I are childfree by choice and neither of us has any true dependents, so we don't really have to worry about leaving anything behind, etc.

So to me, for the most part, investing and trading is a fun game, like a high stakes poker game that runs 24/7. My wife and I probably spend less than 10% to 20% of what we make, and we live extremely comfortably and arguably, somewhat luxuriously.

But if you're going to play a game, might as well do your best and try to win. That's how I view investing and trading the markets. It's all rather enjoyable, at least for now. All the green and red numbers next to my assets in my brokerage account are just that, numbers.

In the past, T.I. has stated on multiple occasions that the only true teacher is Life.

Well, in a similar vein, for a very long time now, I view the top guru as Death herself. Sounds morbid, but I contemplate the certainty of my own death regularly, usually at least once a day, and often more.

I pretend that Ms. Death follows me around a few feet behind me, and some day, at a time and place not of my own choosing, she is going to tap me on my shoulder, when it's my turn to lose everything and everyone I love.

Keeps everything in perspective.

If one takes Mass Psychology to the ultimate extreme, what is the most prevalent "mainstream" narrative that has existed throughout all of mankind's known history, one that is unquestioned and mostly unchallenged?

Well, that "narrative" is that conventional human life is important . . .

[langdj]

Thanks for sharing Yodean. That is some great insight into your motivations.

[bpcw]

Yodean, thanks so much for sharing that, your journey is a very interesting one!

[AstuteShift]

@yodean

I call BS on quitting investing, you’re made for this

Back on options

I’ve been testing recently my own version of Dante Inferno option selections with TI philosophy.

The goal is finding unusual call volume and interest on stocks with a ton of action and movement.
The 4 hour and daily at oversold conditions with custom indicators
Cheap options, I’m ok with weekly or 1 month options
Never over allocate and sell half at 100% gains

So far the results have been fantastic. I don’t expect to win all the time but I do expect capital to grow

Speculate or die is the name of the game

https://youtu.be/3rCo94BFIe8

[Bob L]

Sounds interesting. What parameters do you use for unusual call volume and interest?

[AstuteShift]

Sounds interesting. What parameters do you use for unusual call volume and interest?

First is seeing whether my indicators line up. If the stock is massively overbought then forget it, buying calls would be foolish

Stocks like NIO for example, 40-43M stock volume and OI usually 5-10k or more. Stocks that the masses love or that the media is not talking about also.

However it must be oversold on the indicators and lining up for a bullish move. I customized mines so it’s the not the standard settings.

One screener I use is called unusual whales. You pay for it but you save time, great fisherman tool.