Don’t Believe the Hype! (Part 2)
Posted by Mark on October 14, 2016 at 06:28 | Last modified: September 22, 2016 16:42Today I conclude with a few more posts from GB, one other post to GB, and my ultimate response after I had seen enough.
On April 13, 2015, GB wrote:
> NLNK is my next possible trade this week. I
> believe the $430 Call will provide over $33.00+ (my
> goal is $1.00 profit per share per week) so this is
> a triple grand slam with insurance. I can
> only afford 2 contracts but will still make more
> than my weekly profit goal. Thx. [italics mine]
In another post, GB wrote:
> Hello… I’m not too familiar with the different
> names like collars, spreads, etc. But my goal is to
> create a near zero Delta, hence zero risk. I’m
> thinking that it limits my upside but protects my
> downside because the Put is already ATM or ITM,
> again, a higher quality Delta… [italics mine]
Here was an insightful post by another member in response to one of GB’s posts:
> …your suggestion to add long puts to a covered
> call makes little sense. You are creating what is
> known as conversion. Long stock + short call + long
> puts. It is a flat position, which can only be used
> to lock in profit/loss. If I understood your trade
> you are adding puts after the stock has moved against
> you. Hence you are locking in a loss. IV variations
> might diminish your loss or even create a very small
> profit but again conversion is a lock.
To that, GB responded:
> Sound [sic] like profit to me all day long and all
> the way to the bank!!
After some hearty laughs, I felt compelled to offer GB one response to all his posts:
> If there’s potential reward then there is no such
> thing as zero risk.
>
> If you don’t know the different names then learn
> them. Ignorance is no excuse for being oblivious
> to risk. Don’t put on any trades unless you fully
> understand what your exposure truly is.
>
> Your posts have been entertaining with phrases like:
>
> –consistent weekly profits
> –‘gravy’ forever into the next generation
> –the coast is clear to keep it and make premiums
> until it is ran up again
> –those who stayed are rich and retiring out this
> year and next
> –sound [sic] like profit to me all day long and
> all the way to the bank
> –so this is a triple grand slam with insurance
>
> Where’s the one about trading being an ATM machine?
>
> Nothing about trading or investing is free, nothing
> is guaranteed, and nothing here is ever worth the
> kind of exuberance you seem to project with your
> posts. There’s risk inherent with everything and
> if you trade too large aiming to be too greedy then
> you will one day learn the hard way by getting blown
> out of the game for good.
>
> Just my two cents: be careful and watch your back!
I feel that pretty much said it all.