It sounds simple enough. But for most of us, it isn't. Ever have that driver pull out of a parking lot in front of you like he's driving to an emergency (of course there was no one behind you, he could have waited for you to pass but had to cut you off instead) ... and then proceed to drive down the road in front of you slow enough to make you think he has a flat tire? Does this just happen to me? You sit there behind the wheel wondering if the only rush he was in was to get in front of you to slow you down. - Or at the checkout line. The customer in front of me invariably always has something going on. Just buy the stinking thing and get out of my way..... but it never seems to work that way.
Is it easy to accept delay without getting upset or angry? Hell no!
Patience and trading stock options go hand in hand. Is it easy watching your trade erode as the timer is ticking toward option expiration? Hell No!
JB's biggest trades at om.com required extensive patience. The easiest trade to make is buying a stock or an option. The toughest part is knowing when to sell. And for most they will sell quickly after seeing the option trade go green.
JB has a knack for riding these trades out to fruition and that takes a lot of patience. A lot of it is being able to ride behind that car with it's right blinker still on doing 20 MPH in front of you without a care in the world that someone else actually has something to do today. That's patience.
Unless you are buying a stock option at the bid ( that is: you put in a bid to buy a stock option in the hopes that someone will sell the options to you at your price) more often than not your trade is losing money the minute you buy.
All out of the money options inherently will lose money over time. Which makes time everything. We know how valuable time is because we have been raised to try and efficiently/ effectively manage time. Which makes being patient on an option trade that much more difficult as time sucks away your money with each passing minute.
The recent volatility has made it even more difficult to remain patient. Stocks have spiked higher on numerous occasions for absolutely no reason, turning profitable PUT positions into losing ones. You can add frustration to the angry and upset description of patience. It can become terribly frustrating watching time and price action turn a great trade into a losing one.
Patience is a gift. Most people are not patient. This world breeds impatience. It's worse today than ever before. We can watch whatever we want whenever we want almost wherever we want. We can get a hot meal in minutes (depending on how long it takes the person in front of you to order... if you know what I mean). Don't know the answer to a question? No more combing through the bowels of a library reference section. Just Ask Google. In seconds your mobile device has the answer to almost any of life's questions.
If you are not gifted with patience, it must be learned and earned. When trading options I refer to some instances of patience as "sitting on my hands' Which simple means - I am not trading anything at the moment.
The stock market feeds from the hands of the impatient.
Don't like the current market action? Don't trade. Be patience and pick your spots.
Getting frustrated quickly when your trade starts to sour? Perhaps you are putting to much of your capital at risk. Stock options are tremendously risky trades. But that high risk comes with the potential for some enormous gains.
The great thing about trading stock options is patience can pay off in a big way. The more patience you are the more your position can grow.
Case in point this week. The Biotech bubble that I saw bursting back in August took another leg down into Friday's close. Patience saw the $340 puts grow throughout the week from $2 to near $40 by Friday.
Another great example from this week $FB:
I looked real dumb just minutes after opening a trade for downside on $FB. The next day I didn't look so dumb.
Yesterday some cheap one day trade's I bought for a move to the downside took a lot of patience before they came through. Heck you could argue my sanity for buying PUTs on $HD in the face of its furious early morning rally. The name surged over $118. I was a buyer of the $118 puts earlier at $.50 they moved as low as a 50% haircut before surging into the close.
The tough part about being patient... it doesn't always work. I was patience with $CELG $123 puts and ended up salvaging them for a loss last Friday. This Friday the stock traded under $107. It was down over 15% this week. I was a week early. The great thing about stock options is you can go out a few weeks, a month, a few months for a trade you see happening. Of course the farther you go out in time the more you are going to pay for those options. But you can be more patient.
I am not the perfect trader and I am certainly not as patient as I need to be, Probably the only good thing about getting old, is you get wiser, you naturally slow down. So yeah... I'm getting older, more patience, wiser... which should help me continue to grow as a trader and market observer.
Said, woman, take it slow
It'll work itself out fine
All we need is just a little patience
Said, sugar, make it slow
And we come together fine
All we need is just a little patience
Guns N' Roses Music