Why I Trade for Singles & Doubles Instead of Home Runs

Why I Trade for Singles & Doubles Instead of Home Runs

Posted On November 2, 2021 4:49 pm

When all around you hear about fortunes being made in Tesla (TSLA), or anything crypto-related, it becomes tough to stick with your knitting basic trading.  The word ”basic” itself has now become a pejorative label for someone who doesn’t know what’s going on.   

Admittedly, I have no idea what’s going on within many pockets of various asset groups; so call me basic. Just don’t call me ”extra,” which is apparently the term for someone who’s overly dramatic.

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Did I do good using those terms, fellow young people? 

I guess the point I want to get across is at this stage of my trading/investing career, I’m not interested in reinventing myself.  I always want to learn and will continue to stay on top of news and trends as best I can. However, I ultimately need to stick to my knitting of finding quality setups and taking my gains and losses as they come and go.  

A recent example of that is an Options360 trade where I took a bullish position in Advanced Micro Devices (AMD) yesterday.  Here was the setup described in the Alert sent to members. 

AMD had blowout earnings last week but the stock responded with a “meh.”

The company is positioned to benefit from autos to the metaverse.

It has now retested the old high reversal around $118ish and today has a nice igniting candle.

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AMD stock chart

I sent an Alert to buy the 120/124 diagonal call spread for $3.30 debit. 

The stock popped above $127 today, pushing the spread fully in the money.  I sent an alert this morning to close the position for a $4.00 credit, which can be described as a first-class problem for a mere 17.5% overnight gain.  Do I wish I structured the trade differently?  Maybe.  Do I compare it to all the fortunes supposedly being made in TSLA call options and NFTs of bored apes? As much as I love my primate brethren, that is not a place I want to trade.  Look at what happened with the Squid Games tokens, which pumped and dumped “investors” to the tune of $250 million in just three days.  

A key investor trait is the ability to change your mind while not letting it be polluted by the notion that every trade should be a home run.  “Staying power” is crucial.  I’ve felt FOMO (fear of missing out) at various points this year.  But, then I look at my results, with Options360 up some 53% year-to-date.  That’s okay with me.  Maybe you don’t get headlines hitting singles and doubles (rather than home runs). However, if you do it consistently, for a long enough period, you can end up in the Hall of Fame.  

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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.