My Adventures in Options Trading
I started dabbling in trading while experiencing my employer going through the IPO process. I was a kid in my late twenties who was being handed a sum of money that I had no idea what to do with — and this was a recipe for disaster.
My days consisted of watching the violent swings of a small cap hyper-growth stock sky-rocket one day while plummeting the next. Sitting helplessly in unvested stock options watching my account swing tens of thousands of dollars.
I became consumed with “cracking the code of the market”, I was determined to learn how to beat the system. I have always had a knack for spotting cycles and patterns in any given system, and I felt that Wall Street would be no different. I was determined to build and deploy a process for arbitrage.
I initially started scalping micro movements on small caps. I had zero knowledge of technical analysis, but this was 2014 and basically, any dip that you bought made money (we are in a very similar market as we speak).
I was doing fairly decent with this strategy but wanted something more. I trolled the twitter feeds and I stumbled upon this crazy options spread trader who ran a chatroom (like they all do), and mirrored his plays for a year or so.
He took trading option spreads to an entirely different level.
He would leverage the use of low-cost weekly butterflies and verticals in an attempt to catch fairly large movements in either direction. As the week progressed he would adjust (open and close) the body and legs based on market movement. All said and done he would squeeze out 100% to 1000% in one weekly position (bare in mind that a majority of the positions would expire worthless).
I quickly learned the power and flexibility of trading option spreads.
As I grew in my career I learned that my sweet spot was in longer term swing plays coupled with leveraging complex option spreads. I had a knack for gauging market sentiment and leveraged this for my personal gain.
I had finally mastered the market!
That is… Until I experienced my first real market pull-back.
The day was was August 25th, 2015. I blindly bought the first dip (as I always did), then I bought the second leg lower, then the third leg, etc. Being the “market master”, I didn’t adequately hedge my positions to the downside and after the brutal month or two of a consistent market down-cycle, I had destroyed a huge portion of my account.
I was trading from a completely emotional space and was violently thrashing around in a panic trying to recoup losses.
What did I learn from this? Never trust a trader, entrepreneur or investor who hasn’t had a failure or a major draw-down in some capacity.
This was one of the most humbling and educational experiences of my life.
So, here I am. Humbled, conservative, and chuck full of life experience.
After that draw-down, my relationship with the market had shifted. I didn’t find the emotional satisfaction that I once did being a full-time day trader. Maybe I was jaded, maybe I regained my conscious, maybe I realized there was something more to life than shaving years off my life in an attempt to scalp gains from the market.
What’s next for me? I am currently channeling most of my energy into sharing my experience and knowledge via a mobile trading app called YachtMoney.
Feel free to check it out at http://YachtMoney.io.