Thursday's 40 Point Meltdown

An update on positions:

• SPX: Bought 1 1825 MAY14 put @ 16.50, closed @ 30 = $1350
• GMCR: Sold 5 105 APR14 calls @ 2.00, closed @ 0.60 = $700

Big gambles can have big payoffs, and fortunately this is what happened today. I was cynical as to the merits of yesterday's rally after the Fed minutes were released at 2pm. I saw it as unjustified and that the rally would definitely be sold into today. I commented on Monday that there is HUGE open interest in the MAY14 SPX 1825 puts, so I decided to jump in with them and be a contrarian to the rally. Looks like it payed off nicely.

Same goes for GMCR. 105 is the resistance and I was confidant that it would break the 50MA soon. So yesterday, at the same time I bought the SPX puts, I sold some GMCR calls. Look what happened.

It's important to note that these positions I have been taking recently are MUCH larger than what I have put on in the past. As time has passed, I've become better and more confident in my trading, and I'm subscribing to the notion of, "When the going's good, BET MORE!" philosophy. I've been on something of a hot streak lately, but all streaks do come to an end. No one can ever be correct 100% of the time, and even I haven't been recently. Before I started this blog, I lost money in NFLX, TSLA, GRPN, and HLF. What's important to remember is this: It's not about being right or wrong, it's about how you manage being right or wrong.

You can be wrong 7/10 times, but if you manage your losses and make them small, you can still be profitable with the 3/10 winners. Managing winners is equally as important; take profits off the table. YOU ONLY EAT WHAT YOU KILL. When the going gets tough for me, I'll reduce position sizes significantly. The point of this blog isn't to show off 'how good I am:' I'm only an intermediate trader. The point is to record thought processes and log winners AND losers, and to also get people interested in the markets. The world's most lucrative industry lies waiting at your fingertips if you choose to study and learn how they function, and that has been proved in my case especially over the past 6 months.