PENN - update

Wow, apparently the earnings were good for PENN today, check out the chart:

2 things happened today and 2 things were learned today.

Let's first go to what happened with the trade and then we'll go onto the learned (hopefully) lessons.

The first thing that I did today with PENN was to close out the short Nov. 25 Put Option that was sold back on 10/16 for a $0.95 credit. I closed out that option by buying it back for $0.30. That was a nice $0.65 profit in 5 days.

However, the price on PENN went up high enough to hit my stop at the stock price of $29.05. This sold my long January 30 Put Option for $2.57. I originally bought this option back on 9/16 for $4.40. So I have a loss of $1.83.

So, let's go over the entire trade to see what happened from start to finish so we can get a net number to determine the win/loss amount on this trade.

I bought the Jan. 30 Put for $4.40 and sold for $2.57 = $1.83 LOSS

I sold the Oct. 25 Put for $0.45 and bought it back for $0.05 = $0.40 PROFIT

I sold the Nov. 25 Put for $0.95 and bought it back for $0.30 = $0.65 PROFIT

The total NET = $0.78 LOSS

As you can see, thanks to selling those other options I was able to reduce my loss from $1.83 to $0.78. Not only should you be concerned with your gains but also REDUCING YOUR LOSSES.

From here the plan is to wait and see what happens. I still have my bearish bias on this stock and on the chart you will see that I put on a 50 day simple moving average which is very close to the closing price of today. If it rolls over from that and starts moving lower, then I'll put on a credit spread to either lessen this loss or turn it into a profit.

Okay onto the learned lessons:

1. Again I learned to NOT leave physical stops in the broker system for the market to see. (refer back to my post on the Conspiracy Theory). I was an idiot and forgot to take this one out. A simple oversight. It should not have been in there and I would have still been in the trade right now. I'd rather get out on my own and usually I'd like to see 2 days of confirmation of my stop before getting out.

2. Earnings are DANGEROUS. The correct thing to do in this situation would have been to get out yesterday and waited to see how the price would react to earnings. It's a much safer bet to get out of your positions, let earnings happen, and if you still have the same bias a couple of days after the earnings release, THEN get back in.

So for $0.78 I learned (and re-learned) some valuable lessons. However, be sure to keep an eye on this stock for the next couple of days to see where it goes from here as we might be getting back into another trade on it.