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Consider Your Options: Avoiding the Fate of the Thanksgiving Turkey

Our weekly newsletter is out, and as has been the tradition at Attain, we are in the Thanksgiving mood. This Thursday, homes across America will be inundated with the succulent scent of roasting turkey, whipped mashed potatoes and fresh pumpkin pie. Though we look forward to celebrating with family and friends, the Attain office is thinking about a different kind of turkey at the moment – a hypothetical turkey, complacent in his well-fed routine and ineligible for a Presidential pardon, as imagined by none other than Nassim Taleb.

Taleb describes the comfort a turkey finds in consistent feeding, and the confidence that arises from reliable care. Of course, the turkey has no idea that his comfort is merely preparation for the comfort of a home cooked meal in which he will be the not-so-comfortable guest of honor. Because we’re nerds, every year we get a chuckle out of recreating a graphic from The Black Swan, depicting 1000 and 1 days in the life of the fowl, getting a bit of a  morbid laugh from the fate of the poor turkey in question.

This metaphor isn’t just an exercise is geek humor, though; there is an important lesson to be derived from the untimely end of the well-fed bird. Whether the chart here runs an uneasy parallel to your equity portfolio in 2008 or seems to mimic the trajectory of your Netflix stock holdings, it serves as a reminder that the unthinkable can and will happen. The investor most likely to be familiar with such an equity curve, however, is the investor in an options program. They’ve feasted on the bird, and they’ve been in its shoes on the cutting block, but, still, most don’t go vegan… click through to find out why.