A Damaging Admission From This Trading Pro (and some key lessons)

April 25, 2024

Here’s a crazy story that shows you how I can still make mistakes even after almost 40 years in the markets!

Two days ago I told you how one of the rare occasions I’ll buy an option is when a stock is about to announce earnings.

It’s well known that amateurs control the market open (9:30am) and professionals control the market close (4pm Eastern).

So if pros are driving the stock up into the close, I like to buy an at-the-money call option right before the market closes.

My expectation is that the next morning, the stock will gap up and I’ll be able to sell it right away based on the earnings pop.

Where I Messed Up

Up to there, everything was good.

The problem happened because I saw that NVDA was announcing earnings on 5/22/2024.

So on Monday before the close, I see that NVDA is going up into the close and I buy my call option.

Then I start looking for info about the earnings call on Nvidia’s website. I’m trying to sign up to get invited to the call, I’m searching for news everywhere about it… Nothing.

That’s when I realized that I was a month early to the party. 5/22/2024 is May 22nd, not April 22nd.

So there you have it. That’s how after even 40 years in the markets I can still mess up.

Key Lessons

There’s a couple of key lessons in this story:

Even pros make mistakes – This is just one mistake I’m telling you about, but I make mistakes all the time. Sometimes I click the wrong button or hit the wrong strike price on an option.

I can’t tell you how often I’ve placed the opposite trade that I intended to. For examples, a debit spread instead of a credit spread.
You can be wrong and still win – I was a month early to NVDA earnings, but the trade still worked out. Mistakes working out in your favor sometimes happen more often than you think. (see #1)
Take Action – Everyone wants to make money, but the vast majority don’t take action.

You can only learn so much my reading or watching videos. To really understand trading, you need to DO IT.
Don’t Let Fear Control You – So many traders are scared of being wrong and losing money. I get it — no one wants to lose money. But if you’re scared, it means you are trading with the wrong kind of money.

It needs to be money that won’t affect your life if you lose it. And if you’re not at that point yet where you have that kind of money, you can start out by paper trading so you can still see real results on paper.