Irrationally mad decision making to obtain the American Dream.

50% Stock Options Trading Rule & Bullish Market Attitude

First of all I want to make a note that a reader made a valid point that I was trading 100% of my money.  True.  I am trading incorrectly and creating 100% risk for myself.  I feel I am able to take a such a big risk because I am young, still learning, I have the extra money, and lastly I request nobody does what I am doingTrading correctly if you only used 50% of your money to buy stock or stock options you can only loose 50% still having 50% remain.  If you loose that you still have 50%.  You last longer in this stock market game.  Recently I’ve lost over 75% of my money in my current holdings although I have not sold out yet.  Realistically I don’t expect to gain that 75% back on any given trade because my recent trades besides APPL JAN 07 85 CALLS.  APPL has been my best pick playing PUTS and CALLS and I’ve traded it not wisely either.  I admit I’ve been a sucky trader these past 2 months.  I’m in AMAT JAN 07 22.50 CALLS and they are worth $0 right now with a $5000 investment in it.  Personally I really thought with semi-conductors doing so well and AMAT being the leader in it’s industry going into earnings it would of had a stronger run.  Hence why I created it as a pick.  For the past 2 days it has created a run into earnings I just bought it too far before earnings because I thought there would be more of a run.  Now I know – To trade it later into earnings next quarters earnings.  Since it is worth $0 I am going through earnings unless by some chance the stock has a very bullish run up around 10% tomorrow which is very unlikely.  I can’t really loose anymore since its already gone and I have 2 more months in the options.  I can’t sell it either because there is no one to buy it at the moment.  On the other side having 4 days left in my GRMN Nov 06 60 CALLS, my enitrely WORST trade of 2006 because I was up 400% and did not sell it because of greed going into earnings, I have these 4 days.  A very bullish candle came up today and investors were re-buying GRMN with all the bullish tones in the market today.  Possibly just possibly if it has a good move in the next two following days I can still sell out of the calls with a small profit but get my money back.  I’ve been very foolish.  I want to help people, but first I need to help myself and get my mental side disciplined to sell sell sell when I am right and my trade goes into a sweet profit.  As for MSO DEC 06 30 CALLS I am also surprised every time it hits $22 it keeps coming down.  Across the board stocks have been going sideways before these economic reports.  With a positive note from the feds I believe now stocks will continue there second big move in there yearly trend going up. 

My worst trade of 2006:  Not selling my 400% up GRMN NOV 06 CALLS

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My mother sold out of her GOOG CALLS today and I’m very proud of her.  I believe she made around 3-5 points profits per contract.  You go mom!  Although GOOG went down she was convinced it would go higher and so did I.  She also could of had better trades following GOOG sideways up and down movement, but with patience she profited.

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My youngest (age 29) sister is recently buying her second house.  The second child in my family, second to myself, buying her first house.  My sisters were pretty stunned when their baby brother bought a home and then flipped it and turned into a rental income within a couple of months.  You go big sis!  Your house is beautiful and have fun in it.

Other news in my life is softball.  I’ve been playing the my USCG team for the past two weeks and its been a blast.  I’ve always dreamed about getting to play on a softball team, drink beer, and enjoy the game itself.  I give myself kudos for finally doing it.  My fellow co-workers I think are finally getting to know me a bit better because I like to stay low profile at work.  I’m going to make it an effort to continue playing until I’m finished in Hawaii with my boat.  Some other great news today is passing my tests to advance to Petty Officer second class.  By the time I make it within a year that will be another extra $500 to trade monthly to help me get to my goals.

The market has really created a bullish market attitude and I would tell anyone right now is a good time to buy many well-known retail and technology stocks.  I feel they are the best play.  Do your research with charts, company events, stock news, and how other stocks in its industry are doing also.  I feel I am about to have a come back just being patient and waiting out the currently sideways dips.

Some negative news that I have realized is that if I would of not traded around $1000 a month since the beginning of the year of Jan 2006 I would of paid off my second home mortgage of $15k.  That being said I realized I’m going to start putting half to my account and half to my mortgage.  Less bills the more saving and wealth I can create. 

Well good luck in the big game of options trading. -P

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2 responses

  1. I am struggling with the same issue. So far the thought is to go with 30-40% cash. Primary reason for this is that if market goes south I can buy some cheaper stocks/options.

    November 18, 2006 at 8:18 pm

  2. Hey MDCD,

    Right now I have around $6k sitting. I’m telling myself not to buy just because I like to trade. I’m trying to stay patience to buy call/put options when the conditions are right. Just keep working at your plan. I know you can do it!

    November 20, 2006 at 8:07 am

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