10/18- Caught by suprise

bitterness.jpg
Being blind sided by the earnings train. At least LOGI didn’t go ITM. Uggg. Nat Gas is up, and that is nice.


Oh what a bummer. I thought I had all my bases covered in my portfolio. I missed, it was almost very expensive. I would have exited at least a 1/3 of my position with a profit. Logitech reports earnings with $55-75 million write-offs from bad investments, so what happens? The market loves it. Up as much as $7. That pretty much screwed my position. At one point I was incurring max loss. I bought at an average price of .28, I ended up buying back for .20. Bummer. But it was very manageable. I haven’t had a loss in awhile, I accept them, but never like them.
It is snowing heavily in Breckenridge. It has been all night. It looks like the snow may be here for good. No green grass until April.

Pick your ticker, by how the name sounds? Go long, to push the mkt down with Suck my Nasdaq

LOGI – as told above, I exited the Nov/Dec 30p calendar for .20. I was trying to think what I could have done differently. Last week I considered buying 1 OTM call and 1 OTM put at the wings (breakevens) for every 10 spreads I owned. The second thing, and while I don’t believe in averaging down as the underlying moves away from you, I could have tried purchasing this calendar when it was marking as low as .05. Picking up 50-100 contracts down near even may have been an interesting option. I may look at this type of opportunity during earnings season. A quick look a the chart (support and resistance) and a strong or drop in price may be the catalyst needed to drop the price of the options low enough to buy them at a very low spread price. The risk would be relatively low, and I would be looking for the front month and a back month option. The risk is .05 or less, for a possibly good quick gain.

So here is how this could work: After the stock moves hard, the trader would be looking for the underlying to move away from the strike (1-1/2 strikes away from the move, the front month (Nov) would loose most of it’s value, as would the next month(or further) out (Dec). When the spread collapses towards EVEN it is a buy. There is no risk of assignment, because you are buying the OTM option. So, either the stock stays far away from the strike, and the front month expires worthless, then the trader can sell back the remaining long option for .05 and breakeven, or the underlying will retrace toward the strike and the spread will open back up.

This strategy would have certainly worked today with LOGI, however LOGI was in clear air above 34, so there was no technical downward sell pressure, yet it retraced anyway. This would have worked with PPCO a few months back as well.
USB – Sold 1 unit of jan/feb 32.5c for .15. At least I know they are trading up. I would like to pare down the position a little. But I like that the underlying dropped below the call strike.
EBAY. I tried trading in the volatile environment of ebay, I just played with 100 shares and lost .17.
PGH- great news in the Nat Gas supplies this morning. And PGH responded well for my long position.
NFLX – earnings on Monday. Due to my earnings shocker with LOGI today, I wanted to take some profits. I took half off with a nice 70% profit. Exited 2 units of the Nov/Dec 22.5p for .40, and 2 units of the Nov/Dec 25c for .45. I now am hold 2 units of each of these spreads at least through the weekend. This took all my risk off the table, and made me feel better about LOGI.
IWM- I have a composite position here. I took off the bear put spread portion of my IWM butterfly, I now have a great position in IWM that is profitable if the spread stays between 79 and 91 through Dec expiration. It is comprised of Oct, Nov, and Jan options.
During my mid-day relaxation I finished watching A.I. – Artificial Intelligence (Widescreen Two-Disc Special Edition) I saw it several years ago, and I remember being very affected by this movie. I watched the first 3/4 last night, and the last part today. Wow, it still was powerful.
Fellow UTHR buyers, who are you. I see you on TOS. You are still working a few sells on your 70’s. I don’t mind someone trading “with” my trades, however I also see that you are trying to better me by 1 and 2 cents in your offer. Low blow. Anyway, have a nice dinner on the profits.
My little girl enjoys this song. “‘Feel Good, Inc” Survived the day.

Happy trading.
Disclaimer: These trades and ideas are for your entertainment. I am not a licensed broker or agent, and this is not to be construed as investment advice.

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