Search

The Bag Holder

The bag holder is not someone to mess with. The bag holder has hands of diamond and a heart of stone. However, the bag holder can turn evil, upon which the Gods of Stonks smite him with paper hands and coal. Now. why do I speak of so called "bag holder"? Well, I am the bag holder at the moment. I got into a PENN call with a far out expiration and it took a turn for the worst. Instead of following my rules and abiding by my Stop-Loss, I dug in deep and averaged down... 8 times... So I am down almost 46% and instead of panicking, I hold. Why? The mighty beast called "Inclusion to the S&P 500". This happens on Monday and it is the entire reason I am holding and why I will most likely hold through this week. The Greeks are no longer on my side either as the Delta (rate of change in an option) is almost equivalent to the Theta (time decay of an option). The game plan is graphed and charted. We know where to sell and be cursed with paper hands if it goes beyond that line, and we know what contract price is our lowest we can handle in terms of time decay. This is the hard world of trading. Sometime you have to hold through reds just to get a little bit back and cut your losses. There is one rule to bag holding that everyone needs to know. Never sell when the RSI is oversold. It is the biggest rookie mistake as the stock will almost always come back above 30. For the time being, while we hold this swing, we daytrade and scalp to cover the losses. We hedge with puts to minimize the capital lost. And we take note of everything that we did wrong so we do not repeat.


46 views0 comments

Recent Posts

See All