I got greedy and made a measly profit.

Discussion in 'Options' started by KINGOFSHORTS, Mar 10, 2009.

  1. I wrote a bunch of march calls (100 contracts) 7.50 for .99-1.03 and should have bought to close in the .30's when GE crashed under 6.00.

    Rule of the Game, when you get a lucky fast profitable trade, take the money and run. This looked like a black swan event. I ended up closing at 71-78 cents. The calls are now worth 1.61. Who ever bought those 37 cent calls a few days ago made a windfall.

    But I could have ended in a bad unexpected situation those calls hit high, even those strike 9 kicked it up a notch into the .50's they were only worth like 13 cents not too long ago.


    I was expecting GE to do the typical new bottom and slowly creep up to 7.50.

    I had a second opportunity to close in cheap in the 40's but I should have taken it as a warning when I noticed GE was outperforming the S&P during a bearish period.

    I guess this was my almost LTCM event :)

    I will be taking a break and re-evaluating things. This was probably too close a call.
     
  2. jj90

    jj90

    1.00 to 1.61 isn't bad. LTCM is when 1.00 goes to 16.11.
     
  3. Hindsights always 20/20, but did you debate adjusting things at all?
     
  4. heech

    heech

    I personally have a hard time doing anything with stocks under $7.50. I've just been burned too many times, and I'm just not built to respond to market events that quickly.

    I mean, if you look at day's top gainers/losers by %, great majority will be stocks under $7.50.
     
  5. I'm sure we could all do things with much more efficiency if we knew the outcomes before hand.

    Goal is to develop a technique that works fairly well with most outcomes, trying to perfect all scenarios would be an impossible task.

    Susana
     
    Ghost_of_Blotto likes this.
  6. I think that when a position gets nicely ahead that it's a good idea to take some money off the table or adjust the position so that a reversal dings you less. But that's just my comfort zone and isn't suited for all.