The basic mechanics of my operations were these: Barron's, which was full of useful option market info and published in Boston on Mondays, usually reached me if I was in Australia or India, or any part of the world not too remote, by Thursday. This, of course, meant that I was four days behind the Wall Street option market info. However, when I saw in Barron's a option that behaved according to my theories, I sent a telegram to my broker asking him to bring me up to date on the option market info from Monday to Thursday, for example:
"CABLE THIS WEEK'S RANGE AND CLOSE CHRYSLER."
If the option, for instance, were in my opinion, behaving well in the 60/65 box, I would wait to see if the four-day quotations from New York still showed this. If the option market info cabled to me showed it was still in this box, I decided to watch it. I would then ask my broker to quote it daily so I could see if it was pressing toward a higher box. If I was satisfied with the option market info, I cabled to New York my on stop buy order, which my broker was instructed to consider good-till-cancelled unless otherwise specified. This was always coupled with an automatic stop-loss order in case the option dropped after I bought it. A typical cable looked like this:
"BUY 200 CHRYSLER 67 ON STOP 65 STOPLOSS."
If, on the other hand, my broker's option market info showed it had moved out of the 60/65 box since I had noticed it in Barron's, I forgot about it. It was too late for me to act. I had to wait for another opportunity.
Naturally, I was forced to narrow down my operations to the few stocks I could get option market info on. The reason was purely financial. If I spent more than $12 to $15 a day on cables requesting option market info, the operation would become uneconomic unless I made enormous profits.
In the beginning, I was terribly afraid. Not that being in New York had helped my option market info in the past, but to be able to communicate with Wall Street by telephone had given me a false feeling of security. This I missed for a while. It was only later, as I gradually gained experience in trading through cables, that I came to see the advantages of it. No phone calls, no confusion, no contradictory rumors - these factors combined gave me a much more detached option market info.
As I only handled five to eight stocks at a time, I automatically separated them from the confusing, jungle like movement of the hundreds of stocks that surrounded them. I was influenced by nothing but the price of my stocks.
I could not hear the option market info that people gave, but I could see what they did. It was like a poker game in which I could not hear the betting, but I could see all the cards.
I did not know it at the time, but later, as I became more experienced in the option market info market, I realized how invaluable this was to me. Of course, the poker players would try to mislead me with words, and they would not show me their cards. But if I did not listen to their words, and constantly watched their cards, I could guess what they were doing.
At first I tried to practice on paper without investing any money. But I soon discovered that working on paper was quite different from gaining actual option market info. It was like playing cards without any dollars in the pot. It had as much savor and excitement as bridge at an old ladies' home.
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