From my analysis on 4/18:
The first thing jumping out at me is ARR, which is a residential REIT. Price has been pushing down rather consistently since the end of March and last week it based, and ultimately broke the lows of the base by the end of the week. Today, price pushed up considerably, up to the lows of that base and then started dropping off of that level quickly. I missed the initial retest, but if this breaks the lows it made after the drop, I want to get in. I’m going to run the numbers then (probably) set an order to buy a Put if this breaks $7.92
Price did, in fact, break $7.92, triggering me into the trade at $2.39. And as of today, 4/22, this has pushed down considerably since getting into the trade, and now I’m just waiting for the option’s price to hit .5R.
Underlying Price – $7.92
Underlying Target – $7.50
Strike Price – $10.00
Premium – $2.35
Entry – $2.39
Exit – 4/25 @ $2.89
This trade was in profit pretty much the entire time I was in it. I was letting it go until it hit .5R, so I was in it for some time. I noticed that the underlying was dropping pretty drastically when I first got in, but my profit in the option wasn’t that much. I even ran the numbers and realized if I had just shorted it and bought back on Friday, I would’ve doubled what my options value was at, at that time. I’m not sure why that’s the case — the main reason I’ve been looking into options is because their profits are supposed to be higher than straight up playing the stock — so that’s something I need to figure out.
Outside of that, though, last night or this morning before I got out of bed, I had a thought: Even though I got into the trade for more than what I intend to risk, I had a stop loss set and (even if I didn’t) my risk right now is 2%. That thought, coupled with the less-than-I-thought returns, I entered a trailing stop at $0.25 — largely because the options had only moved $0.12 so far on the day when I set the order. Not long after setting the order, though, I got the notification that it was triggered and I exited the trade for a fine, but less than I wanted.