Why is it that when I try and do the right thing by cutting my losses on an option spread gone wrong, that the underlying stock somehow manages to reverse it's course and land OUT OF THE MONEY?
Then on the flip side, if I decide to stay in the spread while the stock goes against me it ALWAYS expires IN THE MONEY therefore I lose the maximum amount?!?!
What the hell is that all about?! It happens every FREAKING time!!
Folks, this ain't no easy game we play! It'll drive you MAD! It's driving me mad right now.
A few perfect examples... last week I bailed out of DE and XOM. Look, I'm trying so hard to manage my losses, to not take ANY max losses - no matter what! So maybe I'm a little trigger happy, but when the chart is showing lower highs and lower lows on higher than average volume, doesn't it stand to reason we keep going down?! Well that's what I was seeing in the DE and XOM charts. I had a Sept 82.50/81 DE play on... and my stop was a close below $82.50 - which we got... so I sold for $140 loss! DE continued lower and I felt SO SMART! Until today, it came off that $81.50 support and closed back above $82.50. Now it may not close above that number Friday, but if it does I'll have taken that loss for NO REASON!
Same with XOM. I had a Sept 96/95 put spread - I closed it Friday for a $330 loss. Today it climbed back above $96.
And then today I bailed out of WFM... this time I was in a Sept 38/37 put spread. That cost me $330 as well. So all told, I've lost $800 on option spreads that may end up OUT OF THE MONEY!
But I'll tell you this, had I stayed in all three... I can promise you they would have ALL expired IN THE MONEY costing me about $2,500 bucks! PROMISE!
I'm telling you... this damn game will drive you NUTS! But I will not quit! Won't do it! By some miracle I'm up nearly 20% on the year, but I don't feel like it.