Escape before Expiration
I has some time at work today to look at a few of my positions being the day before expiration.
Here is what I did and the resulting ROIs:
Closed GOOG for -2.63. Subtract my initial credit of 1.07 and my loss on this is 1.56/8.93 or a -17% trade. OUCH! I talked with Mojo over at insane money who said a good friend of ours will not vulture trade google because it is very highly volital. NICE TO KNOW NOW!! :) There were some things I did really wrong about this trade that Mojo captures very will in his post on this here.
I closed DRYS for -2.90 another trade that was going against me. So, -2.90 subtract my inital credit of +.45 for a total loss of 2.45/4.55 or -53.8% New rule: DON’T TRY TO CAPITOLIZE ON A TRADE THAT YOU MISSED THE BOAT ON!!! A one day difference of entry can be a big difference, a month late entry makes a HUGE difference.
Time for a GOOD thing I did today. I closed TGT for -.06 making the total profit on this +1.01 (initial credit) - .06 = +.95/3.99 +23.8% It is possible to make money in a down market….but you can’t always capture the vultures and don’t try to make up for a trade you missed. There are PLENTY of opportunities made available.
I am also trying a new techique today. I opened a short straddle on CMG because the volatility is extremely high and earnings were coming out a 4pm today! I am bearish on the stock so I put on a short straddle just below where the current price sits. This technique gives me a $38 spread sweet spot to make money before I break even. It is a new technique for me so I am only doing 1 contract to experiment. I sold a Mar 105 call and a Mar 105 put for a credit of $19.00. The credit is so high because volatility is extremely high. When the fear (earnings) is known the volatility will drop and the price of the straddle should drop so I can buy it back for less than I sold it, making a nice profit off the fear of the public! It will be interesting to watch how this trade goes.
Well, February was starting off to look good but I learned a few VERY costly lessons this month and it looks like I will take a loss even though I had more profitable trades than losers (position sizing). I’m glad I learned these lessons with paper money than with real money. I HIGHLY recomend anyone interested in entering the market learn with fake money. Make the mistakes you can erase easily with paper….don’t bet your house away!
