In light of Friday’s botched trade in [[BSC]], I’m adding a new rule to my Trading Rules:
TAKE THE OBVIOUS TRADE!
I think by now we all know the events that transpired with BSC and its put options (sidenote: can you say, insider trading?). I originally saw the egregious volume highlighted over at the Option Addict, made a mention of it here, and helped at least RC make enough for ‘a few beers’.
So with everybody taking the obvious trade (buying the put option, for what turned out to be about a 400% gain), what on Earth possessed me to do the opposite (selling the put options, very much convinced at the time that this was the ‘smart’ thing to do)??
Some may attribute it to lack of focus in the morning, lack of any real plan, or perhaps over thinking (those braincells have since been promoted).
However, we may never truly know…as these events will soon be shrouded by history’s cobwebs and repressed by future profits. (At least I kept my risk to the standard 2% and thus avoided destroying my account, a la HPT’s infamous episode. So really, it’s not the loss that is bothering me about this; it’s the sheer stupidity of it all. Of course, taking the 2% loss vs. the 400% win doesn’t help either.)
Fortunately, there’s a lesson somewhere in there…don’t bet against the money. Go with the easy & obvious trade. Keep it simple, stupid! Or, as QotSA says, Go with the Flow:
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