When I was reviewing my open positions this morning, I couldn’t help but have the feeling that all good runs must eventually come to an end. Everything goes through cycles.
As I was doing post-mortems on winning trades that recently closed, and updating stops on winning trends I’m continuing to ride, a feeling of foreboding hit me that this run feels “too good to be true.”
This isn’t necessarily true, but it has felt like any long trade I’ve put on recently was destined to be a winner. If I’m not careful, I can easily cross the chasm into blind overconfidence. That’s where most trouble starts. Certainly for me, anyway.
In the near future, I’ll probably be looking for less aggressively bullish bets. And the ones I choose will likely require longer timeframes to play out. Meanwhile, I’m beginning to favor some delta-neutral credit spreads wherever I can find favorable setups.
I touch upon this and much more in this week’s Options Jam Session:
