My Jun 19 975 ES calls

Discussion in 'Options' started by scriabinop23, Jun 11, 2009.

  1. I have 6 days on them left. The very fact that I'm posting about them is a sign this is a losing trade. (and that means I should cut it) Whoever can resort to commenting on this thread without using it as an opportunity to rip me apart, I commend you. And if you rip me apart, I don't commend you. :)

    Regardless, I'm holding the lottery ticket til at least Tuesday. This last week of spinning dreidels has really killed the little trade, and it has eroded horribly.

    Anyone feel like we are out for an upside breakout? Or is 956-957 all this market can get to?

    Someone give me some hope. :) heheh... It doesn't feel toppy only because implied vol is still contracting.
  2. What is your cost basis?

    Which would make you feel worse?

    1) Riding it out and losing almost everything.

    2) Cutting your losses and watching your "lottery ticket" soar.

    It seems at least now, you have "ammo" to live another day.

  3. Exactly the dilemma.. 9 pts from post the employment report. Worth around 3 right now .. #2 would make me feel worse, but the probability of #1 occuring is probably 80% right now.
  4. There is always the option of turning it into a spread. Maybe you could sell the 985s. But the problem is, the 975 contracts are less than 3 right now, so your loss is almost 70%.

    If you look at this position from a new perspective - Would you be willing to initiate it at this price and hang on?

    If you really believe that there is an 80% chance of you losing everything, it seems like the choice is obvious.

  5. sell 2 ESM9 975 calls
    buy 1 ESN9 975 call and turn it into a calendar, and give yourself another 30ish days.
  6. Hi Phoenix,

    1) Cost basis is 100% irrelevant. This is a trap for almost all investors/traders. The only price that matters is the price you can get for selling the calls NOW.

    You either want to sell at that price or you don't. Cost basis considerations make it impossible for the trader to do the right thing.

    2) I agree that your #2 is important, but it is difficult to put a price tag on it. But it is a good idea to avoid situations that would, if events turn out one way, place you at a psychological disadvantage.

  7. Hi Mark,

    Very good points.

    I asked for the cost basis to get a better overview of the situation. You are correct though - many people (I too am sometimes guilty!) tend to use their cost basis as a foundation for their decisions. They might have only a 5% loss, but in their attempt to "break even" will run it into a disaster.

    Strange how we humans think, isn't it?

  8. Totally agree.
  9. BTW, to moderator: I originally posted this in trading forum instead of options b/c it wasn't a question about options, but something prompting discussion of general market consolidation and direction.

    That said, any thoughts on S&P in the very near term?
  10. If we were all in control of our brains and emotions, trading wouldn't be much of a game.

    #10     Jun 11, 2009