I Basically Took $1,500 and Set It on Fire

I’m such a freaking idiot. It hurt to write this article.

I’m going to keep this one short, because it already hurts to write this article.

I should have treated my random speculative trade like Las Vegas. I should not have set parameters for myself. I should have tossed caution to the wind. I didn’t. And I’m a freaking idiot for it.

Or maybe not.

We’ll figure it out by the end of this article.

But first, see this November Data Driven Investor article for background:

So I owned 10 Ford $15 January 2023 LEAPS options.

This is why I’m an idiot.

I sold my calls for about $65 each. I was up on this position by as much as 30 or 40 percent (I think. I tried to put as much of what happened out of my mind). Then Ford stock dipped and I went into the red.

Down seven percent, I decided to be “disciplined.” I exited the position and never looked back.

Until today.

Double sigh.

I avoided stories about Ford stock for a while. But I caught a glimpse of an article referring to Ford’s recent massive run. I had to look.

Basically, if I still owned those Ford calls, I’d be sitting on a roughly $1,550 profit. Not too shabby for what would have been a two-month old position.

Here’s the deal. If you’re a regular or full-time trader, you have to do what I did. There’s a reason why you sell when you’re down by whatever number you set. For every position that ends up turning around, several others probably would have wiped you out.

Along similar lines, if I held and got out of the Ford trade with a tidy profit, I would have set a bad example for myself. I would have possibly let this bit of success (part luck) influence future positions. Traders cannot do this. It’s one of the main reasons why a majority of traders fail.

This said, I’m not a trader.

I believed Ford was going to go on a run. I was right. I should have treated it like Las Vegas and said, “I’m bringing $700 with me and if I lose it, I lose it.”

It’s the difference between serious trading as a profession (or even a pastime) and infrequent speculation as a tiny part of a larger, long-term and defensive, mostly dividend stock portfolio.

It’s all good, though. I took my Ford proceeds and distributed them across a basket of my long-term holdings.

Even though I never actually had $1,550 (it’s crucial to realize this), it still feels like I set that much money on fire.