Well... here we are in a new week and I still find myself living in the past!
I can't seem to get over that mangled GM trade I exited last week. Do you guys struggle with that stuff, holding onto bad trades? It's like holding onto bad relationships - you just got to cut the emotional ties and move on, right?!
Last Tuesday GM closed at 35.15. Everything in me said GET OUT! I had a profit of somewhere around $220 - $230, which was more than 50 percent of the original premium collected of $420. The volume that day was only a third of it's 3 month average, AND the $35 area had proven to be tough support. The chart AND my instincts said BOOK IT!
I held instead... 3 days later I exited the trade out of fear of the whole recall crap and government fine announcement press conference. I made $70.
I held it because of GREED, and sold it out of FEAR.
I also held it because I've been trying to be more disciplined, booking at least 65 to 75 percent of the original premium collected. But here's a question, should I use some arbitrary exit I think I'm entitled to? OR should I let the price action tell me when to get out?
The one positive I can take from all this, other than the fact that I did book a profit, is that my instincts were correct. I know that deep down I can do this. I just need to trust what I have learned.
Alright, I feel better! I just needed to get all that out!
Let's move on...
Below I'm going to highlight a few decisions and things I'm watching in my portfolio. However, If you would like to see ALL of my open positions, just click here.
100 shares of DDD @ 53.97 - Obviously I'm underwater here, but I've got an idea. If we get a drop to the $45 range I'm going to buy a call. Yes, I know that is a big NO NO for me - buying directional options. BUT, let me explain. It's going to be tricky, and I'm using small amounts of capital so I don't mind trying something different here. I'm going to buy a call on a pullback to $45 or so, THEN I'll sell a call against my shares when the stock rebounds back to the $49 range. (Or maybe I'll sell the call now, and then buy a call later on a pullback since we're trading around $49 right now.) Either way, the premium collected on the call sold will pay for my directional trade. In fact, after it's said and done, I'll still have a small credit. Basically it's a calendar call spread.
FB weekly $58 put, $100 premium - I sold one weekly $58 put on Friday. I'd love to see it expire worthless, but if FB runs up above $60 I may just close the trade and take my profit. Again, I'll just have to watch the price action and let it dictate my decisions.
MO June 41/42 credit call spread, $150 premium (10 contracts) - I'm watching this one closely. Even though it doesn't expire for another 4 plus weeks, I need to watch out for the ex-dividend date on 6/12. IF the stock is above my short strike of 41 before this date I'll need to close it out. I'm also keeping it on a short leash because my max risk on this play is high, $830! BUT it's a high probability (80%) that it closes UNDER $41 come expiration.
TWTR June $47 put, $465 premium - This play is a PURE stinker! For now I'm doing nothing, BUT once we get into June I'll look at rolling it out to a further-dated option, as well as rolling it down a few strikes to at least $44, maybe lower if I can get the premium.
Alright, so that's it for now. I'm looking at a few potential new positions, but I'll visit that in another blog post.