A long while back I wrote that I am a tinkerer I tinker and thought of that as a very bad thing, and then I started reading the book Antifragile and read about it framed as a good thing. I think my problem isn’t experimentation it is finding something that works and then doing something else.
Today could be the worst day I’ve had trading options. I made two earnings bets that were both small but could end up being total loses simply because of the nature of humans and options. The first was on Adobe and it just goes to show one of the rules I made earlier in the week still holds. A beaten down stock can always be beaten down more.
Look at the tape; beat last quarter estimates, raised guidance, increased subscribers, monetizing AI, and the stock drops. Now the overnight and pre-market aren’t the market and the biggest catalyst of the day is at 8:30. Maybe the lesson here isn’t that beaten down stocks can be beaten down more but that earnings don’t matter in the face of macro events. Adobe isn’t a blue chip stock. It’s a place people put money when they want something that can bounce hard after being beaten down and give returns higher than the blue chips, and right now the blue chip stocks are getting beaten up too.
The other, and even smaller bet, was Oracle. Not because I like the company but because it is a chaos engine almost perfectly designed for asymmetric bets around earnings. Right now it still needs to gain around $30 a share to even reach my strike price. It isn’t impossible and I did choose a cheap contract because I wanted the longshot payoff and as I said overnight and pre-market aren’t the market.
If the CPI comes in cooler than expected and the lid comes off this thing then today could be explosive. However if it is expected or hot then I just threw a small amount of money away, and that is how it should be looked at. A small amount. My options and equity aren’t perfectly balanced but my brain views the options side of my investments as the real thing and the equity side as simply existing when it should be the other way around.
That is the tinkerer in me. I like the experimentation and finding a new thing that might work and work well. The issue is I sometimes lose sight of the goal or forget what is really important. Kind of like how Google’s core web vitals aren’t pet care.
David Huzzard Writes 