Friday, January 06, 2006

Peace of Mind

Any day one gets frustrated with the market, a tendency to Do Something rears its ugly head.

Today is that day.

My recommendation is to employ this very simple but effective strategy:

Do your "Do Something" trades on paper. Plenty of brokers offer paper trading these days. That's of course not a new concept but the reality of broker-driven paper trading is very, very therapeutic.

For example, I want to sell premium and I want to be long delta. My good sense tells me that right now it is a probabilistically poor play. However, the "Do Something" syndrome is telling me that this time the probability does not apply. After all, NDX=100 is up almost 100 points in four days and it must be 1999 all over again.

So, I am now long OTM NDX Feb calls, short OTM OEX Jan put spread and long ITM Jan GOOG calls (just because it must be going to 600!). Plus, I am long MXIM stock (I honestly think SMH is superb here, but don't care much for time decay)

All on paper.

And guess what? My "Do Something" self is now satisfied. At the same time my mind is rid of frustration and is clear to do good, rational, money making things.

Try it - it's free!



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