Life with options #2

The first trade... 

Photo by Sharon McCutcheon on Unsplash 

Placing your first options trade is a feeling of excitement and nervousness. All the research and learning has been done (so far) and maybe even some paper trading. Or if your me, just skip the paper trading and put your money where your mouth is. Taking that plunge on your first trade should be a proud and climatic moment that starts you on your options journey.

We all remember our first… albeit with trading as time moves on it becomes slightly less significant. Nonetheless mine was a vertical put on Chipotle Mexican Grill (CMG) at the end of January 2020. Right before the hurricane that was about to hit and cause unprecedented turmoil to our current market climate. It was a rather straight forward in terms of firsts— high probability of success, relatively low max loss and with a modest premium. Something one dreams of on their first! As expected, it passed the test and closed at expiration worthless with no hiccups. Simple.

This is where trading feels a little like the casino. It’s like that first time you hit the tables and by dumb luck you walk out with treble what you came in with. Those little neurotransmitters throwing tidal waves of serotonin into your body send you into a winning euphoria. As with any vice they soon level out and with your winnings spent the bright idea of the same “must happen again” sees you rolling the dice the following week.

I will caveat that options trading is not completely like gambling. As someone who wants to promote options trading, I do not wish to send the wrong message that entering this universe is the same as picking red or black. It is not so don’t worry. However, parallels of the FEELING can be drawn. Perhaps a more useful tool than paper trading is to spend an evening at the casino to become aware of how you feel and cope. It can be a crash course into forcing a similar scenario of the actual raw emotions that arise when trading. That heart sinking, mind whirling, stomach turning decision of - do you stick or twist on a 14 with the dealer showing a 6, can be very similar to trading options around earnings for example.

With that in mind it is perfectly fine for those first few trades if they go well to enjoy the wins. Embrace your achievement of making those trades work. Smile about the new path you’re carving. I most certainly did. Although I’m not suggesting that my meagre premiums are the sign I’ve made it, or that I have suddenly become the font of all knowledge on vertical spreads. Far from it. But they made me feel good, which in turn made my life feel good. Without being too cheesy, there really isn’t anything like feeling good that brings you closer to the present and contentment. It lowers that inner critic and lets you see what you have as opposed what you don’t have. Moments of feeling good, are that vital ingredient towards being happy.

I’m sure there are countless experiences in other work that you could relate to getting this “good” feeling. Options trading is by no means the only source of it. But when I weighed up the fact I had only worked probably a maximum of 10 hours from that first trade to the end of the my first month, I felt pretty smug. I was achieving my financial and lifestyle goals; I was truly winning. Also, I would assume minus winning the lottery, or a few other unaccounted for jobs, options are unique in that sense.

 Again, a caveat — if you wish to set up strategies that require you to stare at the screen for six and a half hours a day you can, be my guest. You really don’t have to and unless that’s your thing don’t be coerced to think that’s the only way to trade. But whatever your choice make sure you are controlling how you trade within the blinkers of your coping spectrum.

That winning feeling is great. It’s that achievement of walking a tight rope for the duration of the trade to haul in a profit. Making money is rewarding even if it has never been your sole focus like me. It’s not the heart of intrinsic happiness but it certainly gives you a wider net to cast to catch some. 

Trading doesn’t always have to be serious, I very much let this be the case when things go well. Don’t let the feeling put you down a path of thinking you’re invincible, I definitely don’t, but I do let myself feel more casual and loosen the reins of the other stresses in my life, even if it’s only temporarily.

I am of course only focusing on the positive feelings and outcomes of trading in this post. I will go on to discuss the somewhat darker and negative sides as there are always two sides, so each will get their fair due. But I believe with anything in life we only get told the “good feeling” is always to come, always to be achieved in the future. I think there is something to be said for allowing space for yourself to feel the real emotions that you feel. And if they’re good then let the serotonin and dopamine kick in and embrace those good feelings.