Didn't you say that you would 'sell' the calls if they went to .45. What's the current bid??? So is it "self-control", or lack of discipline? Why have a plan that you don't honor? Just offering my 2c since you publicized your position; therefore you must be looking for feedback! IcE
Can't tell you how many times (in hindsight) I wished I'd scratched a trade rather than using "self-control" to rationalize some trade to be what I "wanted" or "hoped" it to be. A fine line in all decisions... is when you think you "just know what is going to happen"! AFTER the trade is not going well. But as DbPhoenix always harps on... that's why we should have plans, and a willingness to just accept the "disappointment", and wait for a better, surer shot... if necessary to protect capital! As Todd Harrison says... "opportunities are made up easier than losses!" My only (and WORSE) losses are ALWAYS when I: 1. don't have a plan, and typically react to an untoward event or volatility; or 2. Don't honor what I planned. That's all there is..... and then honing your plans day after day to miss less, while cutting losses short.... and staying with a good thing! IcE p.s. thought I'd demonstrate a trade from this morning. I was short SINA 40 puts sold at 2.40. Stock gapped lower... so I closed them with a .10 profit. No questions, but very frustrating and tempted to hold. But I took NO loss.... so far, although I could have rationalized "well it's expiry in two days.. they might peg/pin it to $40!". Yeah..... sure, but they might take it to 37.50/35 and then fill the gap NEXT week. Post-expiry! Who knows for sure. But, the stock reversed. So I sold them again at 2.25. This time it went my way. That little pause of honoring the plan, not accepting an initial loss on front month short puts... allowed for a better trade thereafter. AND I closed the short 40 calls sold at 2.50... in the meantime... at LOD.
Plans always change. I'm not the kind of sucker to suffer a loss that I'm not willing to suffer. We just bounced off the 50, and so selling here would be buying high selling low. I think we've hit a temporary bottom, blah, blah. Of course if the situation worsens I'll sell. I'm on the verge, and I may just sell anyway: I'm undecided. What is your take on this situation? And thanks for your posts.
I just took my loss. I think I grieved yesterday so today will just be depressing instead of an incident of despondency. Maybe I'll buy some stock later today to feed my pathetic need.
don't know if you meant moi... but my "take" (having no interest in or knowledge about LU other than from the bubble days) is that MAY '04 call do not afford enough time; and I'm sure you wouldn't have to pay up too much for going further out in time. That would allow you to calendar spread LU (sell front calls OTM) IF you got a big pop which is obviously what you anticipate. IcE just checked... July is .60 ask/Oct is .80 offered. You paid .57. Now, IF LU is poised to make a BIG pop do you think that .10-.20 CENTS is going to change the account equation much given your big (Soros-like) gamble?! ?! Options guys might tell you that the front is better bet. Sure..... "IF" it pops big by May 21st. But you gotta factor in timing as well.
and it gave me just a little bit more encouragement to make the decision i just made. you're a good guy, thanks. your posts are worthwhile. yeah the july calls look better, but when i bought the may calls the may calls seemed better. i have to come up with a new plan.
new plan: day trade stocks until the spx breaks 1150 at which point, and if the lu q1 report is good, i'll sell the stocks, buy options.
I found the time decay and the fact that you have to predict the movement of the underlying when buying options led me to very inconsistent profits. When I started selling options profits where consistent and steady. I have sold deep out of the money options where the underlying stock gaped against me 40% and still came out of the position with only a small loss.
you deleted your post about "loss"??? But you "made money" today since the bid is now .40 cents not .45. SO actually you should view that decision with +++ for many reasons... regardless of what tomorrow brings! regards, IcE SEVENTY degrees in Chicago tomorrow.... floor traders will be HAPPY!