CLOSE: AAPL 145/150 Short Put Vertical -80%

I did not roll out of this trade. If you did roll, you are sitting on a nice profit right now.   I took the Max Loss of 400.

Lessons paid for on this trade:

• Cost of failing to take action on preset exit rules.
• How TOS Calculates P/L on Verticals
• Cost of Greed and Fear.

I failed to exit this trade prior to earnings with 80% profit. “cause AAPL always blows out earnings and won’t be too effected by this bearish market. Besides in doing my expectancy calculations for last years trades it was better to hold for max loss then attempt to leg out emotionally.” (Failure to take action on trading plan/ Greed)

I failed to exit after trend was clearly broken for a smaller loss.  “Cause it could come back and I don’t want to take this loss.” (Greed/Fear both)

How TOS calculates P/L on Verticals  Current Mark Price – Credit  (duh!)  FYI though don’t bother looking at the P/L % for Spreads. Its too confusing. Better to do it manually.

CLOSE: MA BLPS

Exited FEB08 160/165 BLPS on .05 buy back

Total Credit +1.00

will write more this weekend.

UPDATE: BLPS JAN08 AAPL 160/165

Wonderful example of Trading Emotionally!

Well I’m pretty embarrassed to post this trade(s). This however is a wonderful example of trading emotionally and the cost it has on my trading.

FIRST PART OF TRADE

Trend= Bullish – Neutral
Support at 162 – 160ish
Resistance at 187 -182ish
MACD – Low
STOCH – Low in reversal zone

BTO JAN08 160 P 1.91
STO JAN08 165 P 2.81
=+0.90

BPE: $500 = ~ 6% of total account.
Max Credit = 0.90
Trading days left= 11
Max Loss = 5- .90 = 410
Total potential profit = (.90/4.10) = 22%
Short Delta = .18

Exits:
1) If Profitable:
Buy back short position for .05
Close if profitable 14-4 days left to trade.

2) If gaps down and closes below 165 buy back the short and ride the long.

3) If Closes below 170 without gap – Exit entire trade or roll down and to next month

GREAT PLAN HOWEVER I DID NOT FOLLOW IT.

Emotionally Bought back 165 Puts for 5.55 (the BOTTOM of the trading range for that day BTW!)
- 2.74
Let 160’s run – until today

FEAR of bounce and support at 180 caused me to resell the 165’s for 2.53

Bought them back for 4.00 on 1/17

On 1/16 I had entered a roll for the trade at to Feb for .45 and canceled it because I didn’t want to tie up more margin and continue being heavily sized on AAPL in FEB.

GREED to reclaim profits lost I entered an order to sell 160’s for 4.00 and was never filled.  Time Decay worked against me. I would have been filled around $3.00

BTO JAN08 160 Put 1.91

STO JAN08 165 Put 2.81

BTC JAN08 165 Put 5.55

STO JAN08 165 Put 2.53

BTC JAN08 165 Put 2.53

Total Credits 5.34

Total Debits 9.99

Loss on the trade = -$4.65

Had I held the trade and been exercised my max loss would have been 4.10  This my friends is how not to trade.

RULES BROKEN

Do not turn a winning trade in to a losing one.
Do not place any new trade with out a written exit plan.
Do not place any new trade before 2.00pm.

Do not lose more than your max loss unwinding a spread.

Open AAPL BLPS 145/150 FEB08 +1.00

Trend= Bullish – Neutral
Support at 162 – 160ish
Resistance at 187 -182ish
MACD – Low
STOCH – Low in reversal zone

BTO FEB08 P 145 3.18
STO FEB08 P 150 5.18
=+$1.00

BPE: $500 = ~ 6% of total account.
Max Credit = 1.00
Trading days left= 190
Max Loss = 5- 1.00 = 4.00
Total potential profit = (1.00/4.00) = 25%
Short Delta = -0.18

Exits:
1) If Profitable:
Buy back short position for .05
Close if profitable 14-4 days left to trade.

2) If gaps down and closes below 155 buy back the short and ride the long.

3) If Closes below 160 without gap – Exit entire trade or roll down and to next month

CLOSE: MA JAN08 BLPS 180/175 +16%

Closed MA for Total credit of .70 on weakness.

BTC JAN08 180 P -2.05 (-CB of 6.07 = +4.02)

STC JAN08 175 P +1.45 (- CB of 4.77 = -3.32)

4.o2-3.32 = +.70

Risk= 4.30 (Difference between strikes – Credit = Max Risk [5.00 - .70 = 4.30])

ROI= 16% (Profit / Risk = ROI [.70 / 4.30 = .16])

CLOSE: CROX BLPS 40/37.5 -16%

Over the weekend I analyzed this trade and came to the undeniable conclusion that it did not meet any of my rules and I had traded purely on greed. I closed this position on Monday afternoon for .25 loss. I probably could have gotten out earlier with a credit however this is what it is.

BTC JAN08 40 P 3.45 (-2.66 = -.79)

STC JAN0 37.5 P 2.30 (-1.76 = +.54)

RISK = 160

Loss = -1.15  (-.90 = .25)

ROI = -16%

OPEN: CROX BLPS JAN08 40/37.5

I opened a Bull Put Spread on CROX today for .90 credit. I’ll update with more info later this weekend. This is a very aggressive play by my rules.

STO JAN08 40 Put  +2.66

BTO JAN08 37.5 Put -1.76

Credit = .90

Max Risk = 160

ROI =  56%

Close: MA 180/175 DEC07 PUT Vertical +16%

This trade was closed today for .05 giving a total credit of .75 (16% return in 7 days)
Exit was the auto buy back at .05 triggered at 11:17 $223.49.

OPEN: MA BLPS 180/175 DEC07 +.80

Opened: 12/03/07

Trend= Bullish – Neutral
Support at 185ish
Resistance at 205 and 220
MACD – High and holding
STOCH – High and holding

BPE: $500 =~ 6.5% of total account.
Max Credit = .80
Trading days left= 19
Max Loss = 4.20
Total potential profit = (.80/4.20) = 19%

Closed:

This trade was closed today for .05 giving a total credit of .75

16% return in 7 days SWEET!

Exit was the auto buy back at .05 triggered at 11:17 $223.49 per contract.

OPEN: MA Short Put Vertical 180/175 JAN08 1.30 credit

Trend= Bullish – Neutral
Support at 185ish
Resistance at 205 and 220
MACD – High and weakening
STOCH – High and weakening

BPE: $500 =~ 6.5% of total account.
Max Credit = 1.30
Trading days left= 45
Max Loss = 5- 1.30 = 3.70
Total potential profit = (1.30/3.70) = 35%
Short Delta = .22

Exits:
1) If Profitable:
Buy back short position for .05
Close if profitable 14-4 days left to trade.

2) If gaps down and closes below 178 buy back the short and ride the long.

3) If Closes below 185 without gap – Exit entire trade or roll down and to next month