Took a long position last November in a company I believed in (and still do). It is an oil and gas company named Cimarex Energy (XEC) and I have worked with them off and on since 2010. I bought 220 shares @ $90.58 for a total investment of $19,928 and it has basically steady dropped since my purchase to a current price of ~$70. I bought in because I saw them with my own eyes making good decisions...they have smart management and have always held a great reputation in the Oklahoma Oil Field. I have started this thread for your "Elite" opinions on my position. I plan on keeping it for the long run but am open to suggestions. I am considering buying more shares while the price is down to average out but undecided. thank you in advance for the advice, I know these types of questions might be annoying to some of you seasoned traders and I appreciate your time. I am serious about becoming a better trader and researching every day educating myself to get there.
My advise is more of a general response. You should only buy shares in the company when you believe it’s a good investment today not because it provides a lower price than your last purchase. You should only keep shares in a company that you’ve purchased in the past whether it’s up or down if you believe it it’s still a good investment today. Any other decision-making is flawed unless there’s a tax component.
exit strategy i would average and exit north of 80. long term breakeven at most. ( long term 1-3 years) just my take. i am a rookie.lol
1 X 2 call spread. Something like the 75/85. Play with the math - can be better than DCA with the exception it caps your upside. Doesn't add downside(unless done for a debit) which make it superior to DCA.
You might not like to hear this but, you got into this position without an exit strategy. Whether you are a trader or investor, you should have some risk management in your positions. If not, you will only need more monies! XEC is on a long term downtrend. Hanging on probably, will cause you more in losses. You have lost $4,400 so far and probably, will add to that more losses. Do not average down and buy more shares, you will lock in more losses and compound your mistake. How low? Who knows?
Thanks for the comments thus far everyone. I planned on this being a long hold at purchase time and admit that because of my commitment and belief in the company I did not set a stop loss or even have an idea in my head of a % drop that I would exit. In my mind I planned on selling as soon as it neared $100 again no matter what duration. Lesson learned the hard way.
Handle123 was an advocate of dancing (buy/sell) options around long term holdings to juice gains. Better than averaging down.