Minimizing Losses with Options

Minimizing Losses and Learning Options

The day is starting to roll out, first trading day of the week since Monday, February 16 was President’s day and the market was closed. Coming from a loss of $200+ in an $8,000 portfolio wasn’t good for me. I know this is a small amount compared to people who have a quarter million dollar stock portfolios, but since I am still learning the same lessons. a $200 loss in an $8,000 portfolio is like a $2,000 loss in an $80,000 portfolio or even a $20,000 in an $800,000 portfolio. If I can’t make it big in a smaller scale, I cannot do the same in a larger scale. Anyway all I am saying is $200 is still a big amount for me to just lose.

Prepared to just go sell at a market order, accepting defeat and further minimizing losses as the market opened, a few minutes into the trading day, I modified my trade to a trailing stop just to gain whatever small gains I can get. The market started high right out of the gate then started to dip back, went sideways a bit before rallying up again by 12:00 pm ET. Since the stock I got stuck with last week due to a purchase of a contra ETF with unsettled funds took a real bad hit for me giving the $200 loss, at least turned into a $150 loss after doing the trailing stop. I started with a 4% trailing stop, then as the market turned and rose again, I adjusted the order to a 1% trailing stop to get out of the trade saving what I gained for the day.

I also added a limit order to buy long for TSN, but I missed the bus early in the market open and one thing I learned is to not chase the trade. My limit didn’t make it and that was it for the day. I learned my lesson already from last week that I do not need to try to find a trade at the last minute just because I am trading nothing. I don’t need to be in a hurry.

My new strategy for now is:

If I do not see a confirmed up trend in the market, I won’t buy long yet. If I see a downtrend and has the time to monitor it well, i will go long on multiplier contra ETFs and go and out for a quick win. If I do not have the time, I will not go in the market and remain in a cash position.

Then in the meantime, I will start learning more about options trading and ended up taking Hari Swaminathan course on Udemy. There are many courses online in varying prices. The main reason I went with Hari is he seemed to be the most realistic, stating all the risk, saying it is not easy, telling you everything how you can lose money as opposed to selling some course talking about how much they made in a trade, how much they doubled their money in a week etc. Hari didn’t have much hype, and was honest to say in his free course, that to really master things it takes a year, and several months of paper trading. Totally no get rich quick type of selling points. The Udemy price was also very ideal compared to other courses out there.

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