Are the markets crashing - starting today?
Since a few days more and more media are dealing with the new epidemic from China. But it's not just the media that have taken up this topic, the stock markets have also started to do so. This morning, we could see that in Asia the markets have collapsed by up to two percent. What now, is the big correction on the stock markets coming?
You know what, I couldn't care less. Off course I care about the new desease and hope it will be stopped! But I do not care if the market collapses ;-) The great thing about TheStrangle's approach is that we don't care which way the stock market goes. The main thing is that it moves. The bigger the market or an individual stock (where we have a Strangle working) moves -> the better. Because we always have both a certain number of Calls and a corresponding number of Puts on each stock, we are perfectly positioned to profit from fluctuations.
In this sense I can enjoy my breakfast every day. As long as there is news and the markets move, the better for us. Of course, the biggest swings come when there is negative news, such as when earnings of a share have collapsed, the CFO leaves the company, a takeover is cancelled, or whatever else there is that can push down a share price.
In general, however, I am someone who is happy about positive news and rising share prices. And there are enough events that can push a share price upwards. Better earnings than expected, a new CEO who has proven that he can move companies forward, a takeover of a company, to name but a few.
The most important thing for us is that there is no boredom. Boredom means stagnant share prices that move sideways. However, with most options, we have six months before we have to see a result. But the sooner a jump up or collapse down happens, the better for our approach.
Should there be longer periods of boredom, then of course the prices for both the Calls and Puts will decrease significantly. In such a case, which is not so rare, we have to put the brakes on at some point and sell. This sale will then take place with a corresponding loss, which happens in up to thirty percent of all cases. You see, our approach is not bullet proff. Quite the opposite! TheStrangle approach produces losing trades like any other trading strategy and sometimes it can be many - even many in a row. But these losses will hopefully be absorbed by the profits of our other investment. At least this is working so far as you can see here in our results.
In this sense I wish you a pleasant week combined with the wish that the disease in China will be conquered fast.
Strangle ahead !
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