How My Divorce Helped My Trading

How My Divorce Helped My Trading

Posted On March 23, 2021 3:50 pm

During the first few months of dating my soon-to-be wife (and later-to-be ex-wife) and I would ask each other why we were so drawn to each other. Sure, there was the physical attraction, a similar upbringing that gave us common experiences, some mutual friends, and most importantly — a general agreement over — how shall I say, moral and intellectual issues. 

However, when it came to personality and attitude were total opposites. Without going into a therapy session, which we did, she leans towards rigidity, literalness, and high efficiency. Me? Not so much. But, we rationalized that we’d make a great match not despite these differences, but because of them.  More specifically, we’d balance each other out to form a perfect union.  Ahh true, blind love. 

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Then, the children came, and my ability to dismiss her “crazy” by simply saying ‘you have your style and I have mine.” I became incompatible with her counter, ‘you’re gonna kill the baby swaddling her like that!’” 

However, I’m getting ahead myself. We got engaged in 1999; I knew enough not to opine on the dot.com craze. But, I did notice 85% of her assets were inherited Pfizer (PFE) shares. So, I explained that if you love dividends, you’re going to love writing covered calls, which will boost the dividend income three-fold.  PFE proceeded to rally 350% over the next three years.  My rolling of the call options barely made up for the foregone gains of just owning the stock. We lifted the overwrites in 2005.

My next brilliant macro move was in 2006. Short the homebuilders. I was right, just about two years early.  Adjustments, and explanations, did nothing to lessen the pain nor convince her to stay the course.  

She’d seen enough and in the best odd couple voice said, “GO!”  They hit an impasse, and Steve’s access to the joint account was revoked.   

But, it has a happy ending and some lessons to be learned. Twelve years after our divorce, I’m happy to report that we have an amicable relationship, working in our own way to love and support our children, who are now thriving teenagers. 

Here are the three things that I’ve learned from my divorce (Although, I’m sure there are many, many more.)

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  1. Stick with your style.  That means you must be true to both your own comfort level as it relates to risk and goals.
  2. Do not be dismissive of other viewpoints or approaches. You may not adapt or make use of them but they’re usually valid and often provide insight.  Any good system analyzes alternatives.  This is the best method for finding flaws and bolstering your own models.
  3. Be flexible.  I still make mistakes.  I know my style (and personality is not everyone’s cup of tea). However, keeping an open and flexible mind is the key to success. 

In other news, the Options360 Service just enjoyed the best two weeks of the year.  I credit that to my willingness to shift to a shorter time frame, taking both profits and losses in a matter of days — and mixing in some bearish position as the market has wobbled near all-time highs. The Options360 is now up 21.1% for the year-to-date! 

But, the best news is my children are coming to visit me in FL in two weeks.  Their mother will join them… and that is great too!

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About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.