Big Winners Take Work

October 13, 2020

If you have to work hard for something, you value it more.

This thought came to mind over the weekend as the young couple across the street got married. They didn’t have a traditional wedding in a church in front of hundreds of family and friends. Instead, in true Colorado fashion, they climbed a 14,000-ft mountain and held the ceremony at the peak alongside family and some close friends.

It was an exhausting yet exhilarating four-hour hike to the top. Talk about WORKING for it!

The trail to the summit of Mt. Bierstadt

Of course, the story of hard work comes right back to the markets. The best trades make you work for them. This might sound counterintuitive, but the biggest winners are always the hardest holds.

Losing trades are easy. When a trade doesn’t work out, our stop losses and our defined risk strategies take care of that. Our loss is in line with our expectations. Close the trade and move on. Easy.

But, when we get a big runner with potentially unlimited upside, I promise you — these are the hardest trades to hold. These mountainous profits are hard to climb. Why? Because every fiber of our being wants to book that gain. Fear that we’re going to lose this big winner consumes us.

Just look at our Peloton $PTON trade. We’re still long our October 60 calls that expire this week. It’s been soooo tempting to book this gain and move on. I’ve been fighting this urge since Oct. 1. But the reality is, until it breaks any nearby support, there hasn’t been a rational reason to close this trade. And our patience (and hard work) continues to pay off.

With the stock currently trading north of $130, my trailing stop is now at $115. If we close below that level, that’ll be my signal to get off this ride. Totally worth the sweat we put into this play, don’t you think?

 

*This post was originally an email to All Star Options subscribers. I leverage Best-in-Class technical analysis into directional options trades like this PTON trade multiple times per week. Come check it out Risk Free!