The Big One That Got Away
Living here in beautiful Colorado means that I run in to avid fly fishermen all the time.
And, if you’ve ever known an avid fly fisherman, you’ve probably heard your fair share of stories about the “Big One that Got Away”.
They play back those stories over and over again in their mind, and fantasize that “it must have been T-H-I-S big!”
I would bet that “The Big One that Got Away” has even caused quite a few nightmares.
So what does this have to do with trading?
I’ll explain… and I promise that you’ll RARELY hear this kind of admission from someone teaches others how to trade…
..but I like to keep it real with you.
So I always share the good the bad and the ugly.
And today it’s ugly. I guess you could say I had a “Big One that Got Away” in my trading.
But unlike fishermen, I can quickly forget about this one that got away because I know there are plenty of other big “fish” swimming around out there… just waiting for my bait.
Let me explain what you’re about to see. This may cause some of you to feel queasy so read on at your own peril…
I placed this limit order because my trigger had been hit. Put the order in for $1.10…which means I didn’t want to pay more than that amount for those particular options.
Now my order expired because the going price never came down to $1.10… last I looked they were going for $1.15. Yes you read that correctly .05 was all that I had to adjust my trade to own 15 USO option contracts. A difference of $75 bucks.
Now fast forward a couple of days and look at the chart below. USO MOVES NORTHBOUND WITH A QUICKNESS!
Below is the option chain of USO on 2-23-11.
If I had been filled on this order on 2-17-11 it would have cost me out of pocket $1725 dollars plus commission (which amounts to next to nothing). I could have sold them yesterday for $6000.00. I’d say that would have been a pretty good ROI…wouldn’t you?
Why do I point this out?
Unlike fisherman, we as traders don’t have to wait a life time for the next monster to appear, so don’t worry if you’ve ever had this happen to you. Just forget about it and get that pole back in the water.
There may be a monster lurking on the next chart you look at.
Love to hear about your big one that got away.
Cheers,
Jeffrey Z
3 Responses to “The Big One That Got Away”
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Jeffrey
I have one for you……Im still not over this one, I bought at the money puts on the DIA when it was 14,100 And I sold them when the Dow was just under 14,000!!! And we all know what happened after that. If I would have held…..I could have been retired!!! Lol that was a whale that got away … And whats worse I had it hooked!!!!
I am right a lot but I don\’t let my winners run and I hold my losers way too long
I watched your video on credit spreads….great stuff!
John
Just a quote I read in a Book one time that as stuck with me for years. ” There is only 6 inches that separate someone who doesn’t have 2 nickels to rub together and Bill Gates, or Buffet. The 6 inches between your ears. It All based on how you think about things… So True… So True…
Jeff,
What books do you recommend on Options? I read “Get Rich with Options” by Lee Lowell. It’s a great book. Thx