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American Capital Agency Corp. Message Board

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  • turbofever turbofever Oct 1, 2012 2:37 AM Flag

    OT Thinkorswim

    Hi Olee,

    On the positions you made bullish bets on (bought calls for).. As a "safety check" before entering the options position, did you have conviction in the underlying company and its prospects in the coming year (regardless of the shorter-term nature/expiration of the contracts)? Or were these "trades" where you were trying to "game" a hunch regarding a short-term price movement but with less conviction about the company itself?

    There are lots of great responses here about the tactical side of things when you are going to start a position (buying "insurance", how to analyze additional options stats), but at the 10,000 foot level, were you well-versed in the companies and had you been following them for a while before you committed to the position?

    The inspiration behind my questions is in part due to the companies I'm noticing you made the trades in (and also a potential trade you are thinking about making right now if memory serves: a bull play on Groupon?). To my amateur eyes the plays feel like you are messing with "volatile, traders' stocks", plus adding to the risk by making some contrarian plays (?). Ie, for Facebook & Groupon -- these were/are bull bets on companies that seem to be lacking solid fundamentals and which we can probably all agree have an established history of declining.

    Please don't get me wrong -- you've been hurt, you're probably feeling bad, and here I am looking at these trades after-the-fact (except in Groupon's case) with the luxury of hindsight. I'm not trying to make you feel any worse, and you shouldn't. We all make bad trades, we should all expect to do so many times a year, and we have to give ourselves a break or we won't get back on the bike quick enough and then we'll miss the good trades that come too.

    Safety tactics will help reduce the losses on what in retrospect turn out to be bad trades; but they are still losses. I'd just like to ask these questions above to see if there may be a pattern at the "high-level" to your worst trades, which could help you going forward. Are perhaps your strategic methodologies steering you into riskier choices than you need to make for your general profit goals?

    On a different note.. I've had TDA accounts since they were Datek Online in the 90's. Recently via technical issues they "drove me" to reconsider competitors, and only when forced to look elsewhere did I spend a couple hours with Schwab's StreetSmart Edge, and quickly found it killed TDA (for my purposes). Plenty of features on it, but to me it stands out from TDA because it's highly configurable, allowing you to customize the screen far more than TDA's tools will allow. "Visual comfort" and letting me focus on the exact amount & layout of info I want is very helpful to me. Have not looked back.

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