The Band Plays on as New Highs Are on Tap

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Everything is an event or revolves around one. If it's not the announcement of some economic report, bond auction, crude inventories, a Fed headline, or a war threat, a big earnings report, or worries around the jobs market/economy, it’s something else. 

I don't like saying "in the old days," but in the late '80s and '90s, it was the IBM earnings. That was the single biggest event, and it was when front-running was harder to track but easier to see.

Yesterday, I had lunch with the PitBull. Of course, he complained about his body falling apart and that his stress levels were really high. I tried to explain that everyone is experiencing high stress and that trading stocks, options, ES, SPY, gold, and keeping up with all of it has gotten really hard. 

Years ago, when more algorithmic programs hit the ES, he was on a losing streak. He was upset and blamed it on electronic programs that front-run the orders or make it harder to get fills at the desired price. He knew what the future would look like and said, "They will kill the S&P just like they did the XMI." As the programs took up more space, it became even harder for him to make money trading the S&P. He claims he has a better memory than me, but he has too many "Marty" stories to remember all of them. 

One day, after a series of trades making and losing money, he asked me what he should trade. I suggested a crude oil option spread, and he laughed at me and said, "What do you know about crude options?" I responded by calling out the call spread, which he did and made money on. Fast forward six months and the PitBull is on his way to becoming the world's largest independent crude options trader, sometimes handling 30k or 40k contracts in a day. 

Not only were some of the largest crude desks calling me, but when he shut down two years after he started and moved to S&P options, the crude oil futures pit closed, and not long after, the option pits were done. In S&P options, he turned $35 million into $107 million, and when he reached that level, he asked me what I would do. I told him I would pull $50 million and put it in the bank, trading the remaining $57 million. If he lost it, he would still have the original $35 million he invested and $15 million in profits. 

In August 2015 — a few days after I said that, — he lost over $50 million, and then months later, he lost another $25 million. He has told me over 100 times that it was the single best piece of advice he ever got. 

The other piece of advice is something I will share with you too: If something — like trading — doesn't make you happy, don't do it. In Marty's case, he says he has nothing else to do, and to that, I say you can do anything. The moral of the story is that, win or lose, you have to live your life. Trading is not everything, and just because you have a lot of money doesn't mean you don't have problems or stress. And lastly, it's OK to take time off, recharge your batteries, and come back fresh.