Let's start with a quick recap before going to what I have done recently. I originally was bullish on this stock and placed a November 40/35 Bull Put Credit Spread on 10/15/09, which I received $1.47 for. This is represented by the blue box.
I had an out of town emergency and basically could not get to the stocks for about a week. Ironically enough, this was when the market really started dropping. Murphy's Law.
I figured there would be a support level around the $34.50 mark since that was the last low in this general area back on 9/2/09. So, I just waited to see how it would react to it before taking any action.
We bounced back up to approx $37.50 where we found some sellers (resistance). You can't see it on the chart, but this lines up with the 50 day moving average just above it helping to act as resistance.
On 11/12/09, the second to last candle on the chart (it's a black candle), we started rolling down from that $37.50 resistance. On that date I bought back the short November 40 put for $3.40.
At that point my profit and loss looked like this:
10/15: $1.47 credit
11/12: $3.40 debit
NET = $1.93 debit (i.e. LOSS)
Then today, 11/13/09, I decided to put on a Bear Call Credit Spread. I sold the January 40 call and bought the January 45 call, which brought me in a credit of $0.65.
I'm thinking that we go back down from here. When we do, I'll look for this spread to lose money and will buy it back for a cheaper price.
I definitely have a couple of months worth of work here to get back to positive territory, so FAST will be with me for awhile. However, this will be a great learning lesson on how to correct trades.
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