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Don Kaufman here. |
I'd rather lose money on this trade than not have an absolute grand slam home run. |
This is not a trade I will take off for a 55% gain. |
People keep emailing me about my TLT put spread, asking when I'm taking profits. Here's the thing they don't understand: when you pay 91 cents for a $5 spread that could be worth $4, you don't manage it like your typical quick scalp. |
While everyone's watching Nvidia's China problems today, the real action is happening in bonds. The 30-year Treasury just spiked past 4.98% - something we haven't seen since 2005-2006. |
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My TLT position is finally working, and naturally, people want me to cash out like some weekend warrior taking beer money off the table. |
Not happening. |
The Problem with 55% Thinking |
Most traders are completely backwards on trade management. |
They naturally cut their winners short and let their losers run. You put a dollar at risk, see 55% gains, and think you're being "disciplined" by taking profits. That's exactly how you stay poor in this business. |
When you pay a buck for something that could be worth four, you're taking a one-in-four shot. That means you better make the full four when you're right, because you're going to strike out a lot. |
Think about it like odds. I've got a slow pony that might not win, but if it does, it pays big. What's the dumbest thing I could do? Take my money off the table when the horse is halfway around the track. |
Why This TLT Trade Is Different |
I paid 91 cents for a $5 put spread with 45 days behind it. Everyone's been hammering me about this trade since I put it on. "The TLT trade sucks," they said, right up until it was profitable. |
When you spend like a complete degenerate - which is what governments are doing right now - eventually the markets are going to look at your debt and say, "I don't believe you can pay this crap back." |
So they start selling your bonds, which pushes interest rates higher. |
The worst thing that can happen to the US government right now is interest rates going up, because they're rolling over huge amounts of debt. |
And guess what? |
The worst thing that can happen is happening right now. |
The Management Philosophy That Actually Works |
Any monkey can find a trade. How I manage it - that's the defining factor. |
When this spread hits $2.50, I'll start considering my options. When it hits $3, then we're talking about real money. But 55%? That's not even covering my risk on a trade like this. |
You can't build wealth taking small gains on your longshots while letting your sure things turn into disasters. That's exactly backwards. |
What This Bond Crisis Really Means |
Today's bond selloff isn't some random market move. This is governments around the world getting their wake-up call. France is getting hammered. The UK is seeing heavy damage. The entire global bond market is repricing risk. |
I've been saying for six weeks now: we're going to have yield curve control in the United States within 18 months. They can't let this 30-year Treasury float freely when it threatens to destroy their debt rollover. |
The Bottom Line |
This TLT spread is not a spread I will take off for a 55% gain. I will see this trade in hell before I take it off early. |
Management is way more important than finding the trade. |
When you have 91 cents at risk with very low probability but high payout potential, you have to make that high payout. |
The bond crisis that started today validates everything I've been saying about out-of-control spending. While everyone else is chasing tech stocks, I'm sitting on a position that could pay 400% if governments keep spending like degenerates. |
That's not a trade you take off for beer money. |
To your success, |
Don Kaufman |
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One Chart That Matters: NVDA | | | | Nvidia cracked hard at the open near 169, flirting with 170 after a heavy selloff tied to Taiwan Semiconductor and Chinese AI firms shifting away from Nvidia GPUs. | This level is critical because Nvidia is the driver of mega-cap tech—without it, MSFT, META, and AMZN risk unraveling. The tape shows Nvidia in danger of breaking its first real sell-side structure in months. |
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Reader Question of the Week | Q: Is this dip a buy? | A: No. Risk has increased dramatically after hitting expected move lows immediately. The buy-the-dip mentality can get systematically punished here. Define risk if attempting any longs. | | SPX Weekly EM = 86.36 http://tos.mx/!sTj7Cq64 |
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