Sometimes you’re so overwhelmed by your addictions that you are unable to exercise rational judgment. When The Beast calls, it’s voracious and sucks all the air out of the room.
You can try, but you can’t escape The Beast. So don’t even bother to try.
If I’m writing about it now, you can safely guess that yesterday was one of those days.
The cold sweats, the shaking, the denial. All classic signs that The Beast had taken over and that beast is not patient or forgiving. It needs its sacrificial offerings.
And that was exactly what I was facing yesterday, as we were within 36 hours of the end of this options cycle.
The Beast was calling to me. He wanted those offerings. he had waited long enough.
For me, The Beast can only be soothed by placing trades. Any trades.
Despite its outward calm appearance, yesterday was a turbulent day. If you’re accustomed to only looking at the closing numbers, you’d have no idea of what had transpired. You’re also the kind of person that probably eats sausage without the slightest thought of the attendant inhumanity.
While the Dow Jones was up by about 65 points, the S&P 500 was only up 2 points. As a general rule, usually there’s an 8:1 ratio, or so. Today it was more like 30:1, meaning that things weren’t quite as good as the Dow’s numbers would have you believe.
Its been a rough 7 week period. At today’s close, unless something really extraordinary happens, we’ll finish down for the seventh week in a row. Based on the hideous Research in Motion earnings report after the close yesterday, all indications are that it will be a bad day today.
But on the positive side, if you thought shares in RIM were a good value yesterday, you’ll really think that they’re value priced today.
And if you’re looking for value, maybe you should head over to pick up shares of Pandora, which was able to keep its share price above the IPO offering for almost 26 hours.
Better buy those shares now, because one talking head of an analyst is looking for a $5 price soon.
Too soon to joke about Pandora? My bad.
This month has been fairly atypical for me. I haven’t made anywhere near the number of trades that I normally make. Beyond that, when I did take profits by closing out a sold call option position, instead of being presented with a new opportunity to sell new call options as the price of the underlying stock resumed its upward climb, I sat waiting for that climb.
They never came.
The Beast doesn’t understand that. He wants trades, even if they lack rational basis.
And that describes what I did yesterday.
Instead of having the opportunity to sell new call options on shares at higher prices, I decided to wring out every last cent by chasing the stocks down, even of that meant losing them to assignment at a loss.
How smart is that?
But you don’t think about things like that when it feels as if bugs are crawling inside your skin.
So I sold in the money call options of DuPont, Dow Chemical, Microsoft, Hewlett Packard and maybe something else.
I forget, but they were all losing positions.
What I do remember is that I also sold puts on something called Harbin Electric, one of those decidedly bogus Chinese companies. It had already fallen about $8 to a price of $6. So I sold $5 puts for a premium of $0.52.
What’s the opposite of “Value”? I always get confused when dealing with puts.
Anyway, clearly you do desperate things when The Beast must be fed.
I tried to rationalize my trades by saying that the market would be down today and I would end up not only getting the premium, but also keeping my shares.
But I was wrong.
The market went down later in the day yesterday and at least for the moment all of those stocks were below their strike price.
Given the tone of RIM’s numbers, no one is really expecting a good day today. Since I am now careful about what I wish for, I’m staying agnostic on today’s market. But it is safe to say that if you do already own RIM shares, you will be RIM jobbed today.
And not in a good way.
The truth is, I don’t really know what I want. Although superficially I always want the market to rise, sometimes deep down I really do want it to fall.
Reverse that for the Sirius and Harbin puts
Sort of schadenfreude with purpose and not just schadenfreude for the hell of it.
As the day ended, the chills seemed to subside, although I still had a slight tremor. The Beast lay uncomfortably close to me on the La-Z-Boy, sated, but prone to rear its ugly head at any moment.
As long as those moments are between 9:30 AM and 4 PM.
Admittedly, sometimes I’ve been so in need of feeding that beast that I’ve wandered into off hour trading, but in an effort not to kill its host, The Beast and I have come to an agreement that we really won’t do that very often.
Fortunately, The Beast understands that weekends are for sustenance of the host. No trading, no writing about trading and no talking about trading.
But come Monday morning the Beast will be ready and perversely enough, I’ll be more than ready to start gorging his bad and ugly self.
Come gains or losses, I do love That Beast.
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Copyright 2011 TheAcsMan