Wow what a rollercoaster ride this last expiry. I had one big loser which dragged down my returns and was a winner up to about a week before expiry. I had an IC $30,40-50,60 June on for CPLA which I sold 3 months ago. The stock did what I wanted for the first 2 months then it started to creep up to $50. In the last 3 weeks it stayed in the low 50s for much of the time.
So what happened? I didn’t follow one of my trading rules for ICs which is close them out at least 5 days ahead of expiry. My plan was to close it out on Thrusday week which would have been correct. However, on thurs the stock jumped to $54 and I felt it was on no news and it would fall back over a couple of days. Also $54 was very close to break even so I wanted to try to regain a few more dollars back.
On Monday the stock drifted up again and I waited and on Tuesday in jumped to $58, very close to my max loss. Gamma was killing me and thus too late to get out so I waited until Thursday morning and the stock moved back to 57 and I got out with a $4.60 loss.
The hard lesson here is I tied up a good chunk of margin for 3 months for this trade, had a profit all the way until the last week when I got slammed. Had I followed my rules I would have gained a small amount instead of losing money.
I had a couple of other small losers but had a couple of very nice winners so overall a nearly 10% gain for the month is ok.
Time to move on and make some money.
Sean's Trading Journal 