Written by A.J. Brown

Trading Stock Options in Uncertain Times

Trading Stock Options: Lemons into LemonadeDuring uncertain times, it’s easy to start blaming circumstances for what happens to your trading portfolio.

It’s the Fed’s fault… the market’s fault… Bear Stearn’s fault. Or is it?

Let’s consider a few things to put this in perspective so we don’t get caught up in the blame game and squander perfectly good trading opportunities.

Word has it that of the 14,000 Bear Stearns employees, about 7,000 of them will lose their jobs. What’s more, roughly 30% of the common stock was held by employees. This means that many people (thousands?) just saw their livelihood and their retirement savings go up in smoke practically overnight.

Did this affect us as option traders?

No, not at all. We are fortunate to be in a position where we can get in and out of the market quickly, and be only minimally affected when circumstances unexpectedly turn against us.

In fact, the worst news and the biggest down days often produce some of the biggest gains for option traders. Case in point: In the last two weeks, my portfolio has grown by 37% trading solely Trading Trainer strategies and Trading Trainer Money Management rules.

More importantly, the Trading Trainer members that are working closest with me are having the same results. And I have received emails from other members that are seeing massive success as well.

Keeping an open mind.

Because of the tools we use, option traders like us have the ability to be extremely flexible no matter what the broad market is doing.

The single biggest barrier to success for an option trader is keeping an open, optimistic mind. If you get caught up in all the finger pointing and start running around like Chicken Little saying the sky is falling, you’ll only be hurting yourself.

I’m not saying we should deny reality. (Bear Stearns really did tank on Monday.) I’m saying we should not focus on the negative, but rather on how we can turn the negative into something positive. As it’s been said, "In every problem lies an opportunity."

This is why it’s so important to keep things in perspective. Uncertain times certinaly test our skill and emotional resolve… but they also present us with an opporunity to grow and succeed beyond our wildest dreams.

Let me give you one more example.

My closest peers in option trading and I made more profit than most people can imagine on September 11, 2001 and the weeks that followed. Sounds gruesome, I know… but it is another example of making the best out of a horrible situation.

My advice… recognize the great opportunity you have as an option trader. Take responsibility for your own portfolio. Don’t be a finger pointer. And last but not least, become an expert at turning lemons into lemonade. :-)

Best regards always,

A.J. Brown

Categories: Options / Success

4 Responses to “Trading Stock Options in Uncertain Times”

  1. JohnPalmer @ 2:29 pm:

    If anyone got caught in the Bear Stearns stock price decline they either dont have a trading plan or are not following it. A hard lesson but a necessary one.

  2. A.J. Brown @ 8:46 am:

    Good point, John. Although I doubt the employees of Bear Stearns had a trading plan. Most are probably using the “buy & hold” strategy.

  3. John Forman @ 8:05 am:

    I have to disagree with John on this one. There are plenty of strategies and trading approaches out there that could have seen a trader buy BSC on Friday. I’m not trading any of them myself, mind you, but I can see how it’s possible. Of course that’s exactly the type of situation where an option play could have come in very handy.

  4. Separation @ 5:53 pm:

    Ok ive made my decision, im subscribing, this is awesome, keep it comin.


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