This is an addendum to my previous post (which was just yesterday actually):
I’ve received quite a number of queries regarding options, particularly on how I structured them. While I’ve replied every email and comment, I’d just summarize and clarify some points in this very quick and short addendum.
With regards to the Brazil ETF (EWZ), well, I guess I’d just take the lazy way out and cut and paste what I wrote on IN on the 9th June 2017:
Now, with regards to how to structure a position… all I can say is: Just use common sense!
There are many many “strategies” with damn fancy names: Long Straddle, Strangle, Covered Collars, Iron Condor blah blah blah.
I used to study each in detail until I realized, hey this is a total waste of my time. A lot of what’s in the strategy is just simply common sense.
So to all those of you who have emailed me with fancy strategies… you’re wasting your time. In fact, I can’t even remember off-hand the bulk of it, except the very common ones.
So what was my options strategy when it came to EWZ?
Read the post above and maybe you can tell me, cos I don’t know any name for it. (There probably is a name for it)
All I know is that my nett entry price is US$33 and right now it’s at US$37.5 and I’m exiting tonight. The excitement and fear from the scandal has since died down. (No channelnewsasia article on it anymore!)
To conclude: I don’t have a single all powerful strategy that will put you on the road to riches!
It’s really funny how the worlds of finance and healthcare are similar in this aspect: We all like to try to complicate things and give complicated names for something very simple.
I remember back when I was doing my training, once, when faced with a case with complications, an instructor told me and my partner (we have to pair up for clinics) to “change track and utilize an intensive, stepped-up chemo-mechanical holistic approach to treat this case”
We both looked at each other and wondered what new gadget do we have to use that we haven’t heard of. Or perhaps it’s a new medication? A new treatment modality?
Turns out she meant to tell us to continue doing the same thing that we’ve been doing, just do it for another 15mins longer.
She could’ve just said “ok, just keep at it for another 15mins.”
But then, it wouldn’t sound as impressive.
Also, I’d have to keep emphasizing, that personally, I believe all options strategies still require a fundamental analysis, with an eye towards value. This is something that’s easily forgotten. Afterall, who wants to do the bloody hard work that FA entails. But THAT, is really the key. Can’t emphasize it enough.