FRIDAY, APRIL 1, 2016
This is NOT an APRIL FOOL’S JOKE let’s get that straight right off the bat. What a day. I struggled with a few trades and even after stellar single session day trades with Home Depot [stock_quote symbol=hd] gaining more than $4,000.00 today and closing out and Starbucks [stock_quote symbol=sbux] gaining more than $3,000.00 and closing out I still managed to LOSE $1,061.99 for the day and so far the month! Damn it! It was really and truly a wild ride.
I was sinking with Pandora [stock_quote symbol=p] badly in early morning trading. It was dropping and I continued buying down. Before lunch I had 900 contracts of the MAY 2016 9 CALL and I was in the hole nearly $13,000.00!! This is where experience and emotional control really come into play. I could have panicked, sold and stopped the bleeding. Sure, that was an option. The WRONG option. I patiently waited knowing that after lunch each day, 90% of the time, there is a descent rally.
Luckily, I was right. I ended the day only DOWN $1,800.00 having sold 450 contracts (half my position) for a gain. I am holding the remaining position to see what happens next week. See, panic would have LOST BIG MONEY. Never panic, just change your strategy (or go run around the block and step away for a bit that works too).
STARBUCKS – MISSED IT BY THAT MUCH
This is a great example of how even a veteran can simply get out too early. I will literally think about this all weekend.
It started at market open. I noticed Starbucks was going to have a good day so I purchased (buyer) 400 contracts of the JUNE 62.5 CALL option @ $1.05 per. Why June? Just in case I was wrong this gave me enough time to correct a mistake. The order filled at 8:55 AM and I was off to the races. Just a mere 30 minutes later at 9:22 AM I sold ALL 400 contracts @ $1.13 per gaining 7.72% or $3,200.00 (before commissions) and I was very excited! Nothing like making over 3k in 30 minutes I said to myself as I jumped in the shower to go about my day.
Why did I sell? Why 7.72% and $3,200.00? Well, I get numbers stuck in my head when trading and while I watched it going up I said to myself, “if it gets over 3k and I can make 3k after commissions I should be happy with that and I’ll eject”. That’s what I thought, and that’s what I did. I stick to my gut plan no matter what.
Then, I kept watching that option. H-o-l-y Crap…I am just sick. I got out WAY, WAY, WAY too early. I could have easily sold them after lunch for $1.50 per contract. YES, that would have been almost a $20,000.00 gain in a single session day trade. First day of the month! First day of the quarter! I would have been UP more than all of MARCH!! I just want to punch something…
Regardless, what is the lesson here? What should you learn from this? It’s always better to have made money and exited a position only to watch it keep going then to have lost money. Period.
Oh well, sure I would have immediately gone to BMW and leased a new M3, but you know what? I made 3k in 30 minutes and I bet not many people could say that today!!
Never panic. Always have a plan. Don’t hate yourself when you exit too soon…we all do it from time to time.