Right vs. Wrong
Monday August 3, 2026
After the news broke that Situational Awareness LP had been liquidated I bought QQQ 0.00%↑ CALLS. Stacked from 8/3 out through 8/21.
I sold the 8/3 CALLS on Friday for ~150% then bought then back the same day and sold them this morning again for ~140%. As of this writing, the $690 strikes are up more than $2.00 from where I sold them. So I sold them too early. Way too early.
I waited that morning until around 11am because the news was inconsistent and ended up paying up after the market had run considerably. I could have bought the CALLS for 50% less than I did. When it comes to equities you should act first. Think second. There is always time to work your way out of a stock trade. But, with options I tend to hesitate.
To a fault usually.
So I made 150%+140% on one strike. I am still holding a lot of CALLS just no longer any 8/3.
Was I right? Can I pat myself on the back here? In ten years will I post to Twitter something like “I had CALLS on the great SALP bounce? Woo hoo!”
No. Of course not.
You see I could have made 300-500% if I had reacted faster. More if I had held longer - or flipped back in one more time. Far more if I had compounded instead of just buying back the same positional size.
I could have made much more if I had bought CALLS on META 0.00%↑ or CRWV 0.00%↑ or any of the individual stocks that had suffered severely in the SALP book raid instead of just the index. If I had taken the time to slow down and look at SALP’s June 13H filing I could have figured out a better target.
And, I had plenty of time to do this. I had modeled out the likelihood he blew up the night before. So it’s not like I didn’t know what would bounce. I just didn’t think it through very well.
I was right in that a predicted the direction of the market. But, I was wrong on nearly every other important factor. In terms of what I could have made, my actual banked returned kind of sucks.
At best I was a C- student here. Remember, you aren’t competing against anyone else in this game. You are competing only against what you could have done. And I could have done much better.
Just because you make profit doesn’t mean you were right. Just because you make a lot of profit doesn’t mean you were right.
This is sort of like marrying a women who one night cuts your dick off. You did pick the right gender - which that was the simplest thing you had to figure out. No one is going to say you were right in your choice there.
One of (if not the) biggest mistakes market participants make is ignoring the fact that there were many trades that they could have made that would have paid out more. Shorting housing made 4x over three years. How many other trades could have been made with the same information that would have paid out higher? Buying PUTS on Lehman after the crash started certainly would have for one. Buying PUTS on any index would have as well. Buying SWAPS on AA would have made 15-20x.
Another big mistake is people don’t re-evaluate their trades as information changes. AI is a bubble. This is 100% true. It is the simplest factor though.
It is also true we are in a liquidity glut. This requires a little more thought.
It is also true that there is no financial stressor right now for the investor class. Again, less obvious a thing to figure out.
And it is also true that banks are not holding the debt of the AI trade and right now banks are printing revenue because of high interest rates.
Get the picture?
Was sitting in an “AI is a bubble” trade smart after the SALP news came out? The June sell off no longer was about the AI bubble at all but one fund manager getting liquidated.
Was doubling down on that trade the right decision? Or should a person have taken a step back and reconsidered based on new evidence.
If the AI bubble bursts in 2027 can you really claim to have been right the whole time? While losing money for most of the intervening period.
If you don’t learn to cast off the idea of being right or wrong you will miss the obvious easy money because you will already be locked in on whatever conclusion you have come to.
Here is something to consider.
Every year you could make 10,000+%. There is always a string of trades (or just one) that can make that return. GameStop type moves are once in a 100 years. But, there are plenty of trades a year that pay out excessive returns. A few years ago there was an earnings miss that paid out 33,000% in a day.
There really is no upper limit on what you can make up to a certain account size that is. The returns of the market are very skewed. I am sure there is some decision tree that returns 1,000,000% in a year.
How close to that max return do you have to be to actually be right?
This relief rally was obvious. It was obvious once the larger market understood the sell off was not systemic but mechanical due to an idiot being targeted and that the market was going to bounce.
The AI bubble is also obvious. But, unless you make 1000+% on it when it pops you really can’t claim victory over the market.
My advice is to just give up trying to be right. Focus more on what you did wrong.
When people start posting to social media they get locked in. It becomes more about being right than about making money. And shouldn’t it be about making money?
If you accidentally fat finger in a SHORT instead of a LONG and it makes you a billion dollars would you want the money still? Bragging about being right shouldn’t be the goal.
Not working until your 70 should be.
—AJ