The Challenge of Regrets

Acronyms abound. My friend says, “SCW.” I say, “CSW.” Those are acronyms for nonsense phrases, “Shoulda, coulda, woulda” and “Coulda, Shoulda, Woulda,” respectively. What you could have done never moves the needle on the value shown on the bottom line. Trades not taken will be a new category for this blog. I’ll add “Unprofitable” and “Profitable” as well. As we progress, you’ll see the challenge we face to ignore the glaring difference between actual and ideal outcomes. The word some people use to describe this malady is “resulting.” Annie Duke

Opportunities come and go, and adding value to your portfolio is the measure we will focus on as we progress. If you “could have” made more money, so what? Conversely, if your portfolio value is higher by 2% per month or 10% per week, so what? For every investment and every trade, look at the percentage over time. Also, look at percentages on an annual basis. At 2% per month, you reap 24% per year.

If, like me, you allow your mind to ruminate on what might have been, you may find yourself on a long walk through depression. Or, you may find the fear of repeating some undesired outcome will block your ability to take the next potential winning trade. Example: You sell a $480 strike CALL on your NOC stock. And your shares are CALLed away at that contract price when the share price is rising relentlessly.

With NOC trading above $540, you feel like a fool.
You “SHOULD HAVE”
You “COULD HAVE”
You “WOULD HAVE”
Fill in the blanks.

That feeling of missing out on additional profits ignores the improvement to your portfolio’s balance, the additional premium you collected on the options you sold, and the profit on the shares you sold at the contract price. Boo hoo! Poor you.

You have a nice profit and additional funds to use on the next trade you’ll make. Look closely at the chart below, and you’ll see you “COULD HAVE” sold a $480 PUT in November to reap additional premium, and although you may never get those shares, if you are feeling frisky, use some of your profits to buy the 500 strike CALL contracts, you gambler… Please don’t cry on my shoulder. I’m looking for new opportunities to trade and have short shrift for CSW stories.

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