You are so boring
This is how my best friend commented my portfolio after looking at the current positions. Especially the number of titles that are currently in my portfolio made him despair. And somehow I can understand him.
I understand him because he is a daytrader, so he trades every day with an infinite number of shares. Compared to that my portfolio is really boring, especially at the moment where there is no movement. But boredom has something for itself.
Everything but boring - Pandemic Election OPEC
The stock market is anything right now but not boring. "Pandemic Election OPEC" this is what's happening right now as Barrons has written today (see article here). I do not want to trade places with investors who currently own any of the following shares: Boeing, Occidental Petroleum, HSBC Bank, Royal Caribbean Cruise or nearly any stock. Whoever owns shares today is not bored at all. There is more action than a normal investor would like to. A stock increasing x-fold like Tesla some weeks ago is always wellcome but a market tanking 2% or 5% and repeating that again and again - that is pain in an investors portfolio.
I am not making fun of it and I feel pity for all the people who currently own shares and are deeply in the red. Compared to this The-Strangle is very very boring. But you can see how good a boring approach can be sometimes.
Boredom sometimes is good
At The-Strangle we only hold options and always Calls & Puts in a 50/50 relationship. This way we speculate on falling or rising prices and as as long as there is action in the market (prices rising or falling, volatility rising) we have a good chance to benefit. In hectic times like these, it is virtually a guarantee of profits.
This trading approach gives me peace. I can get up in the morning, have breakfast, read the morning news and look forward to the day, Because good news and especially bad news like todays travel ban for Europeans to the USA cause volatility and volatility usually means rising prices for options.
Although I have to admit that even I am am bored a little bit. The drastic movements in the market led to huge Implied Volatility and to even bigger Premium on the options. This means that it is very hard to find attractive new options with a good price-potential ratio. This is why I currently find ...
... nothing to invest
I would have loved to buy Boeing options some time ago and I was always thinking about it. But the premiums were simply too high for me. In retrospect of course a huge mistake ;-( the fownfall would had easily generated huge profits.
And high premium is a problem with almost all stocks at the moment. The underlying instruments have simply moved too much and in too short a time. And the premiums for options have gone up into infinity. This makes it virtually impossible to open new attractive positions. This is a bit boring for me too, because until recently up to 20 positions were in the portfolio at the same time.
I sit on the money and don't know what to buy. But the excitement will eventually subside, the volatility will decrease and the premiums will be lower. And then there will be a lot of stocks that have halved or maybe even lost 75%. And this might open very lucartive chances for opening new positions.
So I'm using the current boredom to build a long watchlist. It might take a long time until new positions can be opened, because it is quite possible that the stock market will fall another 20, 30 or even 50%. But the day will come when there is "blod on the streets" and all hope is gone and newspapers once again scream "Never ever again stocks". Then the low is reached and we can start to build new positions. And from time to time we might find sth. to invest in like the new position on silver we just opned some days ago.
Who am I to complain about boredom
If I take a look into all the recently opend (and in most cases already closed positions) - who am I to complain about boredom? HSBC profit 126 %, USO profit 62 %, SPY profit 106 % - these were the bext days since the start of The-Strangle. If boredom means profit like this I can survuive discussions with my daytrading buddy 😉
Strangle let's go