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Tackle Today: The Dog and the Cheetah

July 17, 2018

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There are clear differences between domestic and wild animals. Any competent veterinarian can tell that. Some professionals are more inclined towards dealing with and treating domestic animals because they are way more predictable in their behavior than their wild counterparts. Some prefer the unpredictability of the wild, though.

The life of a trader can be as hard as. If on one hand, you can trade Coca-Cola (NYSE: KO), a blue chip, low volatility, predictable company, on the other hand, you can face the speed, unpredictability, and permanent uneasiness imposed by Tesla (BIT: TSLA).

We’re not saying one is better than the other. What we mean when we compare both is that traders must pick their animals based on trading aptitude.

Let’s get practical: Coca-Cola’s board of directors vs. Elon Musk.

Coke’s BofD want to sell their dark, sweet, sparkling, bubbly beverage day in day out. They’re looking for predictable results. Cashflowing on carbon dioxide, caffeine and sugar for centuries. Animal: Dog.

Now read Elon Musk’s face and words. The guy is disruptive, he wants to break paradigms, he’s a troublemaker. That’s just his nature and TSLA mirrors him. Unpredictable, all over the place, news-driven wild beast. Animal: Cheetah.

Desiring a predictable stream of cashflow on TSLA will be like petting a Cheetah. You’ve got to be prepared to do it.

As a trader, do you want predictability or disruption? Maybe both. Design your portfolio accordingly.

Trader, you’re the doctor here. Pick your animal.


Chart of the Day

Pick Your Animal

In the picture above you have the differences between KO and TSLA from a volatility perspective (as of July 13th, 2018).


Video of the day

Tackle Theta Spreadsheet

The Tackle Theta Spreadsheet is a tool to help you determine you are getting the best bang for your buck.


 

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