Well, so much for that whole "no near-term catalyst" call I made last Friday!
FB hiring PayPal President David Marcus was all the fuel this stock needed to rocket past that previous $64 resistance.
And boy did it ever, gapping up this morning AND still running as I type this. In all, FB added several billion dollars of market cap today, leaving my tiny little ole credit call spread broken and left for dead.
Actually though I was able to minimize my losses. First thing this morning I bought back in my short 62.50 calls, then I let my long position, my 63 calls run a bit. A few minutes later I sold 'em taking a $60 loss on the entire play. Basically by letting my calls run up a few extra minutes I lost $60, instead of losing closer to $200.
But man! Had I held those calls, WOW! I'd have made a BIG profit today - like well over a GRAND!
So why didn't I hold you ask?
Because I'm chicken shit... well that and I had to work my real job today, so I didn't have time to closely monitor a weekly option.
You see, too many times I've been burned holding long option positions. As solid as this move was this morning, you never know what the market may do. The last thing I wanted was to be holding a bunch of calls as FB dropped lower. In that case I could have lost much more than my potential max loss of $280.
Either way, I've just now started experimenting with this strategy of loss reduction. My first successful attempt was last week in a SPY call spread. I saved myself hundreds in losses just by holding my long position for 5 extra minutes.
Anyway back to FB, I took a chance that with no near-term catalyst the stock would meander sideways with a slight downward bias this week.
And thanks to David Marcus - I was wrong.