Friday, April 16, 2010

Was having a good run of trading and BLEW IT TODAY

Well, I had carefully avoided the market for a number of days or traded very lightly and prudently, and then today had a bad day. It started off by having a lot of work stress Thursday night, staying up late, and having a late shower. I got to my computer as the market opened. I tried to sell my SPG 80 call for $5 and no one would even take it, no big surprise. A few days ago the REIT's looked good but this option expired worthless today - no big deal, I risked $45 on  purpose. Then my fellow comrades in the Stewie service sell VMW for a profit, and I get upset because I was being conservative, didn't want to risk holding the option, so I sold it yesterday for a $30 loss when I could have made a $100 profit if I had kept it until today. Well I didn't know that, so I probably did the right thing, in fact I still believe I did the right thing. Then today, I kept getting drawn to the idea of taking something and buying a cheap option and wacking the market with some major profit. All of the sudden AAPL was headed to 250. I hesitated, the 250 strike option was only $75 and if I grabbed it I could make a lot of money if AAPL later headed to 260. This was all after the market had its usual early pullback, and AAPL was leading the way up. Well there was all this excitement, and I saw this option get more and more expensive and bought it at $140. OK fine, if AAPL was still going to head up to the moon (260) at least I got in, right? Well all of the sudden AAPL fell back to $250, then $249, then someone in the chat room said "Something Happened!!" and I should have sold there. In fact I was putting in an order to sell at $79, and hesitated, thinking we'd get a bounce (as we often have in the last few weeks). Well that was GS getting sued by FC and it was only downhill from there. Talk about losing time premium fast, I didn't want to take a $60 loss, then a $40 loss, then a $20 loss, well I finally sold the option for $13 and at least I didn't hold it until the end of the day letting it get to $0.00. Because this was a very small account ($2.5k) it was a 6% hit, violating my rules of having only a 2% loss. I had called my sponsor and asked him for an exception today to make this one trade even though I knew in my gut it was the wrong thing to do, but my emotions overtook me. We'll see what he says, whether we ignore this given that I had gotten an exception or what. In the meantime I am writing this down so I remember these days. 

No comments: