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Joined: 28 Dec 2005
Posts: 11984
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 Posted: Mon Jan 08, 2018 10:30 am Post subject: Evaluation (incomplete) |
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It’s another portfolio failure with stock options, although I quadrupled the portfolio at one point, since 2007. The market had a substantial rise from 2009 to 2016. And, the DJIA and NASDAQ both rose over 25% from November 2016 to January 2018 with very low volatility. It wiped out my position in put options.
The first failure was buying put options in the second half of 2007, when SPX rose 16% from July to December into the start of a recession. What’s remarkable about that rise was six months of very minor pullbacks on top of the rising market in the 2000s and SPX rose more steeply in the second half of 2007. Keynes was correct: The market can remain irrational longer than you can remain solvent.
My next portfolio will trade only weekly options during option expiration weeks. Options are much cheaper a week or less before they expire and with more leverage. Moreover, option expiration weeks tend to be more volatile. |
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