Thanksgiving was bittersweet in the Craig clan. While feasting on one bird we were mourning the passage of another. Our beloved December Condor was laid to rest on Tuesday, felled with loving care by yours truly (and my trusty shotgun).
Why the grisly death you ask? ‘Twas his erratic behavior following Trump’s successful White House bid. Turns out liberals and crybabies weren’t the only ones who turned wacky following Donald’s epic win. My wide-winged bird went batty, too. I tried to calm him with play-doh and tissues, but his grief was inconsolable. His wild flappings started wrecking my portfolio. The daily losses took their toll and once my short call strike was reached I grabbed the shotgun.
I assure you I wasn’t the only one putting his pet down last week. The 16% moon shot in the Russell 2000 Index was simply too much directional action for an Iron Condor to roll with. Our wide-winged, feathered friends simply aren’t equipped to survive such one-sided craziness. Which brings me to the point of today’s tale.
How do we respond to losing in our December Iron Condor? If you, like me, have a carefully crafted condor trading system it’s important to know how to deal with the occasional bird gone mad. So how have I adjusted my tactics moving forward?
What, you think one losing trade merits rejiggering the whole system? Nonsense. The question worth considering is whether my edge just died alongside the December condor. Do I now think the markets won’t be rangebound most months? Do I now think options aren’t perpetually overpriced? Do I think Trump not only upended the dreams of die-hard lefties, but condor sellers the land over? I assure you the answer to all three questions is a trio of emphatic NO’s.
Abandoning my condor system now would be like the long-term stock investor who jumps ship on his investment in the midst of a bear market because he thinks stock investing has stopped working. To that poor fellow and any other successful condor system possessing traders, I say the following: Don’t be dumb, don’t be short-sighted. If you judge the success of a system based on one outcome you’re woefully naive. Sorry, had to be said.
Rare events (like the ridiculous 16% RUT rip over the past three weeks) happen. And when they do, condors die. So mourn for a day, shake it off, and move on with the system already. Profits await.
And if you don’t have a condor trading system, just wait. We have one heck of a video series being cooked up in the Tackle Trading kitchen as I type. As the principle chef, I promise you she’s sure to satisfy. When the table is set and all the fixings finalized I’ll let you know.