Buy the dip, right? RIGHT?? ($17,000 Option Trade) (Patreon)

I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market. I will never bet against the market.

The market is on a 6 week losing streak. The longest losing streak since 2001. How many of the mfs that said "be greedy when others are fearful" won't touch the market for the rest of their lives lol. 

But not me. Not this time. I have an idea for a YOLO that just might print money hand over fist. 

Over the course of my life as an "investor", I've realized that I'm not good at this stuff. I'm fearful when others are fearful, greedy when others are greedy, I get caught up in hype, I have no patience, I abandon a strategy after two days of bad returns, I cut winners short and let losers run, I'm impulsive, irrational, and emotional. To sum it up: I'm terrible at this. 

That's why I've decided to entrust 50% of the portfolio with Cathie Wood in $ARKK.

Hahah imagine. 

Although I will say if there was a time to buy ARKK it's probably right now. 

I'm surprised Cathie Wood's xanax dealer has had time to post on Reddit recently. 

Let's get serious. I've been holding cash in this portfolio for a while. With a lack of opportunities (and a lot of laziness on my part), I've lucked into missing out on 6 weeks of negative returns. 

This is the time for action. Fear is at an all time high. We can measure this by looking at the thumbnails on Graham Stephan's channel. 

I've talked a lot on my channel about buying long term call options after market corrections. Right now is the opportunity to do so (for me). I can't encourage anyone to do the same. Let's not kid ourselves here and say this is some kind of "incredible opportunity", it's just taking more risk in hopes for a bigger return. Historically, these are the times when doing so has the best chance of working. 

Originally I was planning to go with SPY LEAPS. That seemed like the most obvious course of action. 

Instead, I decided to go with BRKB. Primarily because I believe in Warren Buffett more than I believe the valuations of a lot the companies in the S&P are fair. Berkshire's return is also less volatile than the index. Being that I'm going to be leveraging to the tits in LEAPS, I feel no desire to add an extra level of volatility to the equation. 

With LEAPS, I have to balance two things - 

1. I want to buy as deep ITM as possible. Further ITM LEAPS have higher delta which means more leverage.

2. Further ITM LEAPS are also less liquid, which means we're giving up more money getting into and out of our trade. The good news; this only becomes a real problem if the position makes a bunch of money (because BRKB stock goes up and our LEAPS go even deeper ITM). If BRKB drops down near our strike price, it won't be a problem. 

I'll just cry because of how much money we will have lost at that point. 

I don't know if buying LEAPS instead of shares completely negates the entire point of investing with Berkshire? I mean, the whole idea is that Warren Buffet buys great businesses that he intends to hold for life. Short term volatility in the share price doesn't mean anything when you own businesses that will survive and make money for the long term. 

The furthest expiration BRKB LEAPS expire in January of 2024. Not exactly a lifetime holding period. Especially if you think the US economy is about to enter the second great depression. 

Which is probably the case if you watch finance content on Youtube. 

Could the dip keep dipping? 

Yes.

But there's always an existential threat to the market. Sometimes it materializes. Most of the time it doesn't. This time, it probably will, because the market knows I'm buying LEAPS and I'm not allowed to make money. 

BUT, no one makes massive returns betting with the consensus. This is the consensus right now - 

Not to say you should put a third of your portfolio into LEAPS like me, but is this not the dip that the entire internet finance community was so anxiously awaiting for? 

BuYiNG uP gReAt sToCKs aT dIsCouNteD PriCEs. 

So funny how quickly that idea evaporates the second it actually happens. 

Disclaimer: 

If there is ever a signal you should short the market, this is it: Benjamin dumping $17,000 into long term calls. 

I'm also planning to sell weekly calls against our LEAPS in Poor Man's Covered Call fashion. Probably around the 30 delta mark. We can write 2 of them and collect a small credit that effectively decreases the breakeven of our 2 long calls. 

Everyone buy puts!