Over the weekend, I did a video about three big lessons I learned recently. Contrarian that I am, even to myself, I want to run directly into one of these and debate it: specifically, the point about how real profits come from LARGE quantity positions that are shorter-term in nature.
You see, I track not just my active positions but also the ones I close. I want to see how good or (more commonly) bad a decision I made by getting out.
What struck me this morning, when I sorted out the “would have been” percentage values, is that the BIGGEST gains, both percentage-wise and dollars-wise, were in tiny positions (like 4 or 5 put options) in expensive names. Specifically, Albemarle (ALB):
And Caterpillar (CAT):
The tops, as you can see, were beautiful (although ALB was oh-my-God perfect whereas CAT was exasperating for a while). The thing is, the nominal AMOUNT of dollars these suckers lost created some BIG profits (which, cough cough, didn’t transpire, because of the aforementioned close).
This was heartening to me, because this morning I’ve been going into some positions deep into 2024 or even 2025 with quantities that just aren’t that big (e.g. single digit quantity of puts). But the success stories above, which stand above all my other closes, tells me that maybe there’s something to be said for slow, lumbering positions which have big-ass nominal values.
More juice to squeeze from the lemon, as it were.
