Look. Nobody's Perfect

I wanted to post on Monday to show you just how badly your calculations and analysis can go because the rest of "the herd" doesn't think. The market went down almost 2% for absolutely no good reason at all. Now if the market goes down 2%, anyone who holds options for stocks that also go down that much will have lost about 20%. Fortunately for me, it wasn't THAT bad, but it was bad.

Tuesday, the markets came back. At the end of the day the loss from Monday had been recouped and the year to date (YTD) loss had come to -$274 and some cents. I wanted to wait till Friday to show you this but the excitement at present is incredible. Two things happened to my holdings. Half increased in value, and half decreased in value. The wonderful thing about this is it allowed me to further look into why and I have come to a conclusion that will be of benefit in the future.

The two that went down in value did not go down because my analysis was wrong. They went down because of the timing of my purchase. There is a certain indicator that lets you know whether too many people have bought into a stock or too many people have sold. I had previously ignored this. Turns out I entered those positions when too many people had bought into it. Since price is controlled by supply and demand, naturally the positions decreased in value as the number of people buying reduced. The loss is sitting at exactly 20% but I still have until the third Friday of February (21st) to make a profit. Nobody's perfect so losses are expected. As long as the wins outweigh the losses, I'll be fine.

But let me not bog you down with all this talk. Take a look at the %Gain for the NCR position below (third row). This is what can happen if everything is perfect. Now remember, we are only aiming for a maximum of 20% increase monthly but if things can go this well for a position, we'll just continue to rake in the profits. I will be selling the NCR call tomorrow and replacing it with something else because they become worthless when the market closes on Friday. Again, nobody's perfect, but look at that gain in value when you're successful.