BDK - closed trade

I took profits today in BDK around the stock price of $47.50 or so.

My initial target was $49. I took the profits a bit shy of the target because we have been going up and up and haven't had a pullback. Looking over multiple stocks and the market in general it seems that we are a bit "toppy" and are due for a pullback (even if slight) at some point in time.

If we did pull back, then we would most likely continue even higher after the pull back, but I would lose quite a bit of time in the process. Don't forget about "Theta" which is the amount of time loss we are losing each day. So, instead of going through all that, I simply made the decision to take out my profits right now by selling my option back to the market - "A bird in the hand..."

Here's the chart showing the most right blue shaded box where I sold the option back to the market.

As you can see from the chart, we basically have been going straight up. We did have a couple days of small or sideways movement, but in general our stock just took off wonderfully in our direction.

Once I decided to get out of the trade and capture my profits, I sold my November 40 Call Option back to the market. Look at the left side of the screen at the yellow highlighted line and you'll see the "bid" price (this is what the market will buy the option back from you) is at $8.40.

So, I sold my option back to the market today for $8.40.

Now, let's go over the trade to see how it did. Remember, this was a "live" trade - we didn't know for sure what was going to happen. But, we did have a good solid plan and traded well.

We initially bought the Call Option back on 9/3/09 for $5.50 and sold it today, 9/14/09 for $8.40. This gave us a profit of $8.40 - $5.50 = $2.90 per contract (or $290 per contract).

Our Return on Investment is:

$2.90 / $5.50 = 0.527 x 100 = 52.7% return in 12 calendar days.

I'm not so naive as to try and tell myself that this is annualized to somewhere over 1,200% return on investment per year and have false hopes. But, if I can capture this kind of profit even somewhat consistently, then that's what it's all about.

Right now the market is a bit overbought. I've gone over many set ups today and there's just nothing to my liking currently (yes, I'm very picky, it's my sandbox and I play by my rules not the market's rules). So, we'll practice patience for now until the next trade sets up.