Markets continue to decline today and the VIX index is pushing an 18 handle. Now is a good example of something that I often talk about here, which is
Being wrong. Let’s say when we exited to safety positions last week, the markets bounced and started to recover the next day. Well, in that
Being right. We exited to safety positions last week, and markets have crashed down a decent amount since then. So it’s too early to call but so far anyway it was a great exit and well timed. But what if this is just the start of an eventual 10% correction? What about 20%? What if that was the top? Being right could save the portfolio a huge amount of capital.
Again, being right and being wrong is not equal on both sides. The risk of forgoing profit or saving capital is asymmetric. If markets bounce we’ll be looking for a safe time to get back in. If they don’t and more selling is coming, we’ll be very happy we are sitting comfortably on the sidelines.
Options trading ideas. Anytime the markets sell-off, two things are happening. First, by
We’re not taking a new trade today, but I want to give everyone an opportunity to review one of our go-to strategies during market declines. The Wheel of Fun. Feel free to ask any questions you have, and prepare your paper trading account if you want to follow along with the next trade.
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