Picture this: You're holding long options that are so far underwater they might as well be fossils. The market has written them off. You've probably written them off too. They're the trading equivalent of being down 15 points with four minutes left on the clock.
Which brings me to last night's Bills-Ravens game.
Buffalo looked absolutely cooked. Down by two touchdowns with barely any time left, facing a Ravens offense that had been unstoppable all night. The betting markets? They gave Baltimore a 98% chance of winning.
In options speak, those Bills were classic out-of-the-money calls about to expire worthless.
But then something magical happened.
Call it luck. Divine intervention. Josh Allen being Josh Allen. Whatever you want to label it, nobody saw what came next. Ed Oliver and the defense stepped up. Allen did MVP things. And suddenly, the impossible became inevitable.
The Bills didn't just cover—they won outright. One of those finishes that'll be replayed for years.
It reminded me of this $QS trade from earlier this summer. On June 24th these calls were absolutely left for dead. Trading at pennies. The kind of position where I'm already mentally writing off the loss:
Then,
Boom...
Life happens. The stock moves. Those previously "worthless" options suddenly aren't so worthless anymore. In fact, they increased in value nearly 16 THOUSAND PERCENT from their closing price on June 24th in just 23 days.
Here's what I keep wrestling with: How do you find that sweet spot between cutting losses early and giving defined-risk trades enough rope to potentially surprise you?
I'm constantly trying to thread this needle. Be disciplined enough to not let winners turn into losers, but patient enough to let the occasional miracle play out. It's probably some kind of trading holy grail that doesn't actually exist.
But nights like last night? They remind you why it's worth trying to figure out.
The math usually wins. The favorites usually cover. The out-of-the-money options usually expire worthless.
Usually.
It's that "usually" that keeps things interesting. Because sometimes—just sometimes—Josh Allen decides to be Josh Allen. Sometimes a stock you'd given up on finds a second wind. Sometimes the impossible becomes inevitable.
I'm not suggesting you hold every dying position until expiration. That's a recipe for disaster. But there's something to be said for giving your highest-conviction, defined-risk trades enough breathing room to surprise you.
The Bills reminded us that the game isn't over until it's over.
In trading, sometimes the position isn't dead until it's actually dead.
Never give up? Maybe. But more importantly: never stop learning when to hold and when to fold.
That's where the real edge lives.
If you went to bed early last night, you can catch up here:
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Sean McLaughlin | Chief Options Strategist, All Star Charts
