I forgot to get a post up on Friday for options expiration. Thanks to the rising prices in equities, I had already rolled all of my November options for a profit before Friday. I would’ve made more money by leaving those November options in place to squeeze out the extra few dollars of time value remaining, but the market was looking unstable for a couple of weeks. I prefer to spend a little more money to remove the risk than have some “black swan” event cost me bigger losses.
That’s such a big change from years past and it hasn’t saved me anything yet. Eventually, it will once again be the right thing to do, but since I can’t predict when that will be, I’m going to continue rolling positions early and locking in gains when I can. Looking back at older journal entries, I can find dozens of examples where I should’ve spent $.05 – $0.25 to close a contract only to see that position turn into a loss. It took years of pointing out the obvious from readers, but I finally worked up to common sense trading.
After a few weeks of consolidation, the market looks like it might be ready to return to its ascension in prices. We’ve had more than 500 days of trading without a 10% correction and that seems like a bull that’s lived longer than it should. However, some bull markets have lasted more than twice as long without a 10% correction. Just because we’re in the middle of a longer-than-usual rally doesn’t mean it will end soon. It could, so traders don’t need to get sloppy and overly aggressive yet. I like the idea of keeping some cash available to buy in on deeper dips. I highly doubt we’ll make it through 2014 without a 10% correction. If we do, the 2015 or 2016 bear market is going to be huge. For now, I’m staying bullish and will try to ride the wave as long as possible.