Ultimate example of limit order insanity!

Discussion in 'Order Execution' started by iceman1, Dec 23, 2003.

  1. well, after many years... I guess some of us just don't learn a thing! Maybe it is GENETIC! Heck I've been trading options since the 80s; and over and over again.... I tell/ask myself... why do you place so many LIMIT orders?!!! Well yesterday/today marks the ultimate "bash my head on nearest wall" example of why "limit orders LIMIT profits"!

    I bought RIMM Jan puts... then got CUTE, and decided to put a LIMIT order to buy the other side...

    I.E. 15 RUL AIs at $3 (Jan 45c)


    buy 25 RUL AK (Jan 55c) at .45!!

    Yep! a TRUE STORY... a sad, nutty, ignorant... but true story of what might have been, could have been, should have been! Scrooge here! YEP... why pay .55-60 cents for the calls when you can MAYBE get them for .45?!

    NOW what were the RUL AI's at the time of my bid?! Glad you asked! Offered @ 3.30 on most exchanges... RIMM being up 1.90 or so at said time.

    Wanted to be long a strangle! Good play so far... Iceman1. Brilliant! Right up to the point where you forgot to buy the call side.

    So what is the purpose of this thread... (other than to solicit pity and some empathy from those who have done this same move)? To advise all the newer options traders (and some veterans who do this)... to place market orders MOST OF THE TIME when you are entering the underlying at a level that is within your comfort zone... and you seek a directional trade.

    Those who are good at math, which is many options guys... figure out how much my LIMIT ORDER, scrooge b.s. hesitation cost me, today!

    15# RUL AI: Bid 21.40
    25# RUL AK Bid 11.30

    Those who like me who trade all year... have to work hard and put in lots of effort to find good trades. This one fiasco, faux pas is ONE I will not soon forget! Maybe it will have lasting positive effects on my trading in 2004. We will see! Will advise.

    I hope others reading this caught some of this insanity on RIMM today, and made some dough. As for MOI... I gotta sit here & comtemplate my navel... wondering WHY after SO MANY years... I still persist in placing limit options orders, too many times when I got that feel/hunch/gut about just what to do!

    My advice... JUST DO IT!

    (And some/many on ET wonder why they can't follow trading rules/plans after one-two-three years!) :eek: :eek:


    regards... have a good 2004 bros!

  2. Lucrum


    Reminds me of a trade I made years ago. My mistake wasn't in the type of order I used but the result was just as bad.
    I had been jumping in and out of Calls on UAL for weeks as it trended higher and I was making some $$. One Monday morning I decided to go for broke and went long 30 OTM Calls for about $12K with 2 weeks to expiration. The stock went down every day that week. By Friday afternoon my position was only worth $2K. I was sick. I capitulated, threw in the towel, I dumped em'.

    Well, I just thought I was sick.

    Before the open the following Monday a guy named Marvin Davis announced his offer to buy out UAL. The stock opened roughly $90 a share above that Friday's close and by oex later that week had nearly doubled from where I bought the calls. My position (had I held over the weekend) would have been worth about $225K - a 1775% gain, instead of the 85% loss I actually choked down.
  3. OMG! :eek: That had to be gut wrenching! And I thought I had bad stories! Christ!
  4. In other words, don't be a prick for a tick:D

  5. that sucks; only how would you know that?!

    In the case of entering an options play like a strangle/straddle... why does one get cute? There is no rational reason. Maybe lack of conviction that RIMM would continue higher and rather, sell off prior to the closing bell allowing me to buy "cheaper". Like 30 cents? 20 cents? 50 cents. Pales in comparison to these options' gains today.

    Here I "knew" there was going to be a large move on RIMM... or at least I surmised... one way or the other. THAT is the exact reason why options allow so much leverage and flexibility in participating in said moves.

    Don't think I will ever understand why I did not place the market order. Particularly when I hold overnight positions all the time, with much more risk. Maybe since 1. I have many open positions, and 2. figured the vola was so high that maybe this time... RIMM would go ho hummm post-earnings. Sure!

    Morale of story: go with your gut when it really is a gut/intuitive feeling and not a guess or a "shot"! That is how I separate the wheat from the chaff! This time, however, I feel more like a song I play and sing, often: "John Barleycorn" (by S. Winwood/Traffic). Maybe some of you know the words to it. :p :p

    Well, thanks for the replies so far! But there must be others who have similar war stories like this... so here is your chance to commiserate at the end of a year... and in so doing maybe obtain a catharsis that will manifest itself in better 2004 trades! :p :p

    Come on bros..... fess up!! :p


    p.s. The sickening part is that my puts are now worth .05 from .70! brilliant play... almost as bad as the Bulls trading Ron Artest, Brad Miller, Jalen Rose and Donyell Marshall and drafting Jay Williams...!