Friday, September 17, 2010

Option Update: AAPL a small profit for a big idiot.

Wednesday afternoon I took a small profit on my Sept 270 AAPL calls. With AAPL trading just above the 270 strike, I cashed out my position for a $250 profit.

The next day the stock ran to $277. I missed a profit of nearly $5,000.00. This type of error is infuriating to me.

I took my money off the table for a couple of reasons:

1.      I was worried about weekly jobless claims coming in higher than expected, and the weeks prior being revised higher due to the ‘guestamation’ that was factored in for labor day.  Obviously, the numbers were inline and market shrugged them off.

2.      Next, I assumed the stock would be pinned around the 270 mark heading into Sept expiration. It did dance with the $272.50 price for a few hours but then exploded to the upside on heavy volume.

I figured at max I had an upside of about 1-2 points and at worse I was risking the entire position. I took the profit, and drank myself to sleep last night.

What do you guys think? Did I panic or was my reasoning sound? Obviously hindsight is 20/20.

Please feel free to comment.

Best,

CM




2 comments:

  1. You should have bought longer dated calls. No reason to give yourself less time.

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  2. Why not just buy the stock instead of buying options. Try tarp warrents they trade for pennies on the dollar and they do not expire until 2018 all the large money center banks issued these warrents as part of the bailout of 2008 and 2009.

    ReplyDelete