Investment Knowledge provides opportunities
Knowledge provides opportunities
As I gaze out into the Yield Farming landscapes the possibilities seem endless. I enjoy reading the variety of programs and the relative creativity invested in the various names of tokens and platforms. My dad use to say "Opportunity comes not dressed up in a bow, but sometimes buried beneath the pages of instructions or explanation..." It was his way of saying that something might seem limited and not valuable on the surface, but if you learn and dig a little deeper the knowledge may be very valuable.
Options Investing and profit multiples
When I first started investing and buy stock I would purchase 100 shares of stock, for price X, and hope the stock went up to X+10 or X+100. Then I would profit by 100 x 10 or 100 x 100. That was exciting, but required a lot of capitol and significant time plus seemingly luck to reach the price of X+10 and more luck to reach X+100.
But with options I didn't buy 100 shares, I controlled 100 shares for 1/10 the price. Now I could control 1000 shares for the same amount of capitol. Now I could profit 1000 x 10 or 1000 x 100. This was great, my education on profit multipliers or profit multiples, was the first great thing learned about options.
The profit multiple was great, but it was not all I needed to learn and be flexible about in my investing.
Options investing: Expiration Dates
When I first learned about options, it was simple buying and selling of options. It was limited to investing capitol and hoping the price would go up before expiration, so I could sell the options and get my capitol back, plus a small profit. Then do that again and again...
Two revelations
But soon I learned you could sell before expiration, and you could buy and sell the same day, or buy and sell on expiration.
Hmmm... Expiration wasn't the end point, it was an endpoint.
And... The investment timeline wasn't set in stone, any change along the timeline path created an alternative timeline and an alternative endpoint. It was liberating and it expanded the realm of possibilities and endpoints.
How did I apply this....
I learned that expiration wasn't the goal, profit was, expiration was just an endpoint, not the only endpoint.
I learned that even when a trade went against me I could change things to alter the investment timeline to an alternative timeline and an alternative endpoint. This was liberating, helped insure my success and greatly decreased my failure rate. I did this by opening my eyes, ears and my mind. I opened myself up to possibilities I didn't yet know by choosing to be open to new ideas and strategies. Trying them with small amounts of capitol to see if they were successful and then if they were, scaling them up.
Stocks to Options
Thats how I moved from buying and selling stock, to buying and selling options, then buying longer and longer expirations and then learning to roll my options to the next month.
Rolling
Rolling is a term used in options, mostly with a strategy called spreads, to move your positions forward in time to a different expiration point if a trade moves against you, and sometimes if it moves toward you.
For example, if I buy a position which expires at the end of April, and on or around the 15th the market is moving against me or moving towards me, but to slow to provide me a profit on a position, I could sell my current months position and buy the next months position. If there is enough time and value I should be able to do this without losing money, or very small amounts. This allows the market more time to move in my direction, so my position wins. This is called "giving yourself more time to be right".
You hopefully notice, I didn't ask anyone for a favor, more time, delayed payment, or anything like that...I used my knowledge to provide myself more time to be right. I utilized the permission less qualities of the option trading system to improve my position, so I could win.
Knowlege and opens to change
I couldn't profit from Rolling if I rigidly adhered to the notion that my positions had to profit by the time of expiration and that my options were limited to buying and waiting til expiration and selling then.
I wouldn't profit if I rigidly adhered to a notion that the position must rise or fall, win or lose, based on it's condition at purchase and sit passively and let things happen.
Instead I aggressively treat it like it's my money, my investment, and these are my tools, to use as I see fit, to profit. Plus I read, ask questions and try things to create success.
Many wait for success to come to them, others go out and create their own by learning, engaging, taking risk, and scaling into situations where they can profit. But all the while closely watching things to insure they are vigilant to react to market forces and preserve their capitol.
It's important to say at this point that I am not a great trader, and I don't know everything. In fact I ask people questions all the time. I have learned that there are many people in this space and we all see and understand multiple pieces of information that our brains process better perhaps then someone else or we simple asked someone else who knew, and now we know. The trick is to keep asking questions until you find someone with a good answer, deploy the answer carefully, because even knowing doesn't guarantee understanding and understanding doesn't guarantee proper execution.
We must be smart enough to ask the experts, and we have to be intelligent enough to properly deploy the answers as they apply to our particular situation. And we need to be honest enough and smart enough to know when we are in over our head and need more help then what I described and need someone to deploy the answers for us...
Investment Knowledge provides opportunities
Shortsegments is a writer focused on cryptocurrency, the blockchain, non-fungible digital tokens or NFTs, and decentralized finance, where finance meets technology.
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