Monday, April 3, 2017

Life Probability of Touch

As I'm writing these we have a little action with S&Ps down 15 and the VIX contango at 0.0, and it even touched negative for a minute.
I went to get a screenshot on vixcentral and we were already back to slightly above 0 contango.

Am I happy, sad, crestfallen?  In short vix land, specifically with half reserved in cash for those big dips, we are always hoping for a real action day to kick it off.  When we get these slight down days its just a tease, not giving a real entry point but instead your account of short SVXY puts just showing really angry red numbers at you. (with no strikes even breached)

Last week or two we had a similar down day where I was getting careful possibly too early, selling calls against my position and then having to cover them on the quick rebound.
The options/life lesson here is really taking a step back when it comes to probability of touch.

Just after my little overtrade with the calls and stock, I had the classic work experience of waiting to hear from someone before some project/task needed to start.
(If someone emails back after some meeting, then we will need to finish something by the end of day, whatever- just fill in your own office hell here and flavor to taste)

One person could start preconfiguring things immediately and emailing around just to find out later that everyone else is an idiot and never responds, and it was all for nothing.
I'll give you the spoiler for my day- no one emailed back AS USUAL and a less seasoned version of myself would have had a lot of extra fluster.

So why am I getting nervous in the exact same trading equivalent situation?  In life and work with idiots I already have the conceptual probability of touch baked in, and in options where its about 2x your chance of expiring in the money, I'm guessing the work probability is actually higher.

It comes back to muscle memory and staying mechanical.  One of the takeaways I'm hoping to create in this blog (and mostly for myself) is to intuitively get better at crossing over life/poker/etc experiences into options trading to bring down the learning curve.  Here I already have a great intuitive life experience to know how to chill out and let the options positions and theta just do their own work instead of freak out at the first red tick.  Maybe next time I'll take a bigger breath.

Position sizing, bankroll management, stay mechanical, don't get hit by a bus.



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