Today I want to talk about a recent options trade I did. I made a few mistakes, which limited by returns. While the trade ended up being green, I consider it a failure because for emotional reasons, I left a lot of money on the table. I did not “let my winners run”.
Here’s what happened…
Mistake #1: I wasn’t patient, and paid too much for my PUT options. If I had been patient, I could have saved a lot of money on the options I paid for. I paid 65 cents, but saw them available for 35 cents just a few minutes later!
Mistake #2: After watching the charts for 1.5 days straight, as soon as my trade turned green – I sold. I didn’t look at the charts enough, but sold for emotional reasons. I was fearful of loss, greedy for gains and I was tired of watching the charts. I was happy to finally see green P/L, but I should have looked at (a) MACD – showing downward pressure, (b) selling volume increasing dramatically, (c) technical levels, (d) level 2 buys/sales, and more! Instead I just emotionally sold – quick and uncalculated.
Anyway, above I go into the video and show you what happened.
Stock: BYSI
Trade: Short via Put Options
Catalyst: (negative) Failed FDA approval.
BTO: DEC17 21 5 PUT @ $0.6500 (December 1st)
STC: DEC17 21 5 PUT @ 0.7500 (December 2nd)
The price 1 hour later was, @ $1.05
Lessons:
- Don’t be impatient during entry. Wait for better price entry.
- Don’t be emotional during exit. Watch the charts, let them tell you when to sell.
Chart (notice the green entry, red exit arrows)
