c02 JWBT016-Busby September 30, 2008 13:33 Printer: TBD
26 A FOUNDATION FOR SUCCESS
money; buy the same stock at the same price at another time or on another
day and lose everything. However, nothing etched the importance of that
message on my brain more deeply than the crash of 1987. As noted earlier,
on that date I was long about 1000 options contracts. I was selling what is
called naked options. Arrogantly, I believed the strike price could not be
hit and that I would never be called upon to produce the actual products.
I was going to mop up the premiums and be fat and happy. My contracts
were near expiration when the market headed south. The strike price was
hit, and I was forced to ante up. I had to pay a huge price to deliver on
my deal and I was busted. I was long at the wrong time. Had I been able
to survive for another week, I would have made millions, instead of losing
basically everything. My timing (and my disrespect for risk) left me broke.
Now I pay attention to time and use time in my trading strategies in several
ways.MAGGIE AND MEFirst, I use time to gain insight and knowledge from the time differences
around the world. Consider the following event: Bursts of light explode
across the sky in Sydney, Australia. It is the dawn of a new year down un-
der. Simultaneously, in my world it is 8:00AMon New Year’s Eve and I am
sitting at my desk at home. I watch the celebration taking place on the op-
posite side of the world on the television screen a few feet away. Maggie,
our family bull dog, lies by my feet, keeping me company as I vicariously
enjoy the festivities. The Aussies may be ushering in 2008, but I have not
closed out 2007. I still have 13 hours to go before I see the sparkling crys-
tal ball fall in Times Square and watch the fireworks burst across the New
York skyline. Then it will be another hour before midnight nears and the
popping firecrackers disturb Maggie’s slumber. If she gets really upset, she
might even muster up enough energy to let out a little whimper. The global
time difference highlighted by the dawning of the new year is a good exam-
ple of my first use of time. With the differences in time zones, I am able to
preview the trading day—at least preview the day as traders on the other
side of the world see it.
The sun moves across the sky from the east to the west, making Asia
the first part of the world to welcome each new morning. When Mon-
day’s trading session begins in Hong Kong or Tokyo, I am enjoying Sun-
day evening in the good ole USA. In fact, before I get going on Monday, the
Asian trading day is pretty much over. That means that before I execute my
first trade, I have the opportunity to know how Asia felt about the financial
marketplace. In the land of the rising sun, were they buying or selling? How