Two days ago I wrote a post about my concern about how retail investors are investing in cryptocurrency and recommended the option market as an alternative for those looking for a very aggressive risk/reward return profile. (https://www.facebook.com/maxhmarmer/posts/10211728883231644)
I mentioned NVDA LEAPS as a historical play that 10x’d the gains of Ethereum over a similar time frame.
Little did I know how prescient a call that would be.
As an example of the crazy returns one can get in the option market, yesterday I spotted the combination of a technical + fundamental set up I loved in NVDA and made one of my most highly concentrated option bets I’ve made to date.
I make concentrated bets like this extremely rarely. for what it’s worth—I’ve executed a concentrated trade like this maybe only 2-3 times since I started trading.
The trade was that I bought 15 call options at the 170 ‘at the money’ strike price with a 1 month October expiration for about $11,000.
Today NVDA was catalyzed by a fortuitous analyst upgrade with high price target and the stock rocketed up over 6%, making me over $10,000 within 24 hours.
However, the fact that the analyst upgrade happened today to light the powder keg on Nvidia was mostly luck, or perhaps an intuitive gift. My expectations were more along the lines of a 2-3% gain over the next couple of trading sessions. But the market game is probabilistic and all about tilting the odds in your favor. A landed missile from North Korea in Japan last night could have catalyzed the market in the other direction.
I can explain more about the technical + fundamental analysis that led to pulling the trigger on this big bet for those interested.
Before going further, I must say, these option trading strategies are not for the faint of heart. But neither is trading highly volatile cryptocurrencies.
Many option trades go to zero. And I’ve had days where I’ve been down over $10,000 too.
Despite this volatility I’m currently nearly 5x’ing the nasdaq, up about 40% while the nasdaq is up about 8% since late April.
At the same time I’m prepared to lose it all. I put significant intention into maintaining non-attachment to my results and mentally preparing myself for enduring considerable negative returns which paradoxically often improves my performance.
Even this NVDA trade went the wrong way on me soon after I made it. I was up $1k an hour after making it but by the end of the day I was down $2k. But I rode it out and didn’t panic and woke up to the returns from the analyst’s gift this morning.
Some more context on my strategy:
In June, I transitioned to a near pure long/short option portfolio because I became confident in my abilities to read the market, I’m young and thus can take a hyper-aggressive risk/reward profile, and I’m investing under a year’s worth of income — so should something go catastrophically wrong, it would not be too hard to make it back. For others, I often recommend some subset of their investable assets being in a high growth option portfolio.)
Investing is a psychological game as much as it is a strategic and tactical game. My proficiency as a meditator is an amazing asset.
Ray Dalio, who is considered the most successful hedge fund manager of all time has been practicing Transcendental Meditation for more than 40 years. He said,
“When I look back at my life, I am happy to have had what most people would consider a successful life, not only in terms of business, but in my relationships and in lots of ways. More than anything else, I attribute it to meditation—partially because of the creativity, partly because of the centeredness. TM has given me an ability to put things in perspective, which has helped a lot. I think meditation has been the single biggest influence on my life.”
There are more great insights from this article on Ray Dalio about how meditation can give you super powers ( https://finance.yahoo.com/news/ray-dalio-featured-in-dr-normal-rosenthal-book-super-mind-152727852.html)
Screenshots attached from my options portfolio(s) in two different brokerages.
I expect to be writing more about finance, economics, crypto and tech trends in the coming weeks and months as it aligns with some bigger picture life-mission projects currently manifesting in my world.
Over and out.
Also published on Medium.