During business school, we talked a lot about behavioral aspects of the stock market. Many of them require keeping pretty close to the market, and I admit, I don’t follow the market as close as I like, and certainly not enough to capitalize on the small windows of behavioral patterns of full time investors.
However, one of them stood out as being passively simple. That is that the market traditionally sees a lift after New Year’s. “C’mon”, I thought to myself, “if that were true, everyone would bet on it and the market would balance itself out.” However, last year I remember people talking about this very pattern happening – so I set a calendar reminder to buys some SPY Call Options just before NYE for this year.
Despite the pending fiscal cliff, I figured a few call options to test the theory wouldn’t break the bank and so I bought some out of the money Jan 4 open SPY calls the week after Christmas.
How did it do? See for yourself:
While like any investing strategy, I’m sure this won’t work 100% of the time – but I’ll be making that calendar reminder a recurring one!
Happy New Year!