by curseofthecatwoman » Mon Sep 07, 2020 7:17 am
This is a very interesting topic that I can relate to. I started option trading in 1997; after finishing my thesis on the Black-Scholes Option Pricing model. I was over-confident and wanted to test my skills. Nevertheless; l lost my paycheck month over month and would lose more than I won. I ended up 1997 with a loss. For the next 10 years; I would lose money year over year. I didn't bother to invest in stocks; just option trades. I tried reading CNBC, Bloomberg and Marketwatch articles; charting stocks, following message boards, etc. None of this worked and I found myself neglecting relationships. Missed out on going on vacations, buying a new car, developing a relationship, marriage, starting a family. This is my biggest regret; not living life and focusing on option trading. My total loss over a 10 year period was probably $400,000.
In 2008; an option trade changed my life. Whether is is luck or fate; I made over $100,000 on Google calls. The underlying stock jumped 20% and my calls went up 8X. I closed my office door and took a deep breath; finally something is going right. I made the decision not to risk it all on the next trade and made a promise to finish the year in the green. I banked over 50% of my winnings and only risked 10 to 15% on a option position with the rest. Some of the trades where wins and some were losses. I ended up 2008 in the green and bought some stocks to have equity in my account.
From 2009 to present; I realized that option trading is a game of singles and once in a while you hit a home run. Also, I know that 40% of my trades will end up as losses. This took years to understand that you can't risk it all on any trade; no matter how confidant you are when you push the button. One bad streak can bankrupt you. During the 12 year period (2009 to 2020); I am fortunate to end up with 10 years of wins and 2 years of losses. The two losing years; I was not in a good state of mind (another lesson). I was working for over-bearing bosses who were insecure and always put you down - even when complimenting you. When I got a series of negative performance reviews; I took a three month break from trading - I was losing too many trades and stressed up. At this point; I realized that I may have a problem.
I started thinking about trading and missing the option action. I fought my urges and had some deep conversations with friends and all of them said; buying stocks and holding them for years is investing. When you buy a stock; you don't care about day to day; week to week or even month to month. You hold for it for years and you know it won't go to zero. Stocks go up in the long run. I didn't want to get wiped out by option trading so I turned off the feature in my account and just check on it once in a while. Long term stock portfolio only.
I decided to open up a new account and deposited around $8000 to trade options. The one I chose is popular with the young crowd and I wanted to feel young again so I began trading options on the platform. After twenty plus years; I admit that option trading is gambling. Somehow, my subconscious knew that.
Last edited by
NewSunRising on Thu Sep 10, 2020 9:56 am, edited 1 time in total.
Reason: Account name removed .