Can’t stand the heat ?
Ups, 200 % loss on our current open strangles. What is happening, have we lost touch? Long story short: If you expect huge wins you have to accept losses, We did not have a loser for quite some time so it is normal that the pedal swings back and carma hits us. Read on to understand these temporary losses (btw. none of the trades is closed and all could still turn into winners).
First of all - investing and speculating is risky! As the popular saying goes "No risk no fun" or better "No pain no gain". And if you tangle with options as we do, you can lose everything you invest. That is part of the game.
To minimize risk, we never put all eggs in one nest. We always invest in up to 15 different strangles and put the same lump sum on each of those. Nevertheless it could happen (cross fingers it never will) that ALL of our chosen strangles expires worthless and we lose all invested money.
Maybe The-Strangle is NOT for you
If you can't stand the heat maybe The-Strangle concept is not ment for you.Better by bonds or ETFs or just put the cash under the matress. There is nothing wrong with this. But if you want to earn an interest on your money you have to take on risks. You could also buy stocks, but those cold go to Zero - do we have to mention Hertz as an example.
Damn if I think about Hertz I am getting depressed, as Hertz shows exactly the potential of our approach. If you would have invested in the stock beginning of 2020 your 20 $ per share are now donw over 90%. If we wold have opened a strangle on Hertz we would be sitting on several hundreds percent of gain. Well you can't have'em all.
Day is not over till it is over
Anyway, so we are sitting on 200% minus currently. What to do?
First of all - we have been here before. Sometimes stocks don't move and both, the Call as well as the Put, lose time value. We know that and we have to live with it. Not every stock we pick starts to move huge in one direction.
Second - that's why we decided some months ago for longer expiration dates. Very often in the past we have picked the right stock but the wrong time. Our strangle expired worthless and just a month later we would have made a killing but were left standing on the sideline. Thats why we now alwasy pick long lasting strangles which gives us more time.
Third - 180 degree changes are always possible. Take a look on our strangle for PS. We sold the Put long time ago in March with a nice profit but the Calll was lying down on Zero. Then the market turned and rallied and so our worthless Calls came back to live and we could sell'em end of May for a break even. Big moves are always around the corner.
Fourth - we are sitting on huge profits. We closed 59 trades so far with an average gain of 45%. So even if we would lose 200% which equals just the amount of 2 strangles, in our case 4.000 $, so what?
Stangle ahead !