| Underlying | OPEN |
|---|---|
| Strategy | Long Put |
| Underlying Price | $7.93 |
| Underlying Target | $5.53 |
| Strike Price | $8.00 |
| Premium Mid-Price | $1.13 |
| Break Even Price | $6.87 |
| % Move to Break Even | 13.37% |
| Option’s 1R Price | $2.26 |
| Intrinsic Value | $0.07 |
| Extrinsic Value | $1.06 |
I was looking at OPEN yesterday, and while it was pushing toward lows, it hadn’t quite reached them yet, so I held off. I set an alert to let me know if it did get to those lows, which triggered today (that said, I was already looking at it, but it also happened to trigger.)
Today, price was down again, but largely basing. I almost bought a put earlier, but didn’t want to short into support. I took a bit of a break, played on my phone, watched some golf, and decided to come look at the charts again. I came back to OPEN and it had pushed through the lows of the base it formed, and was sitting right on top of the next support level — threatening to push through. I had already run the numbers to make sure break even was within my target, so I looked to pull the trigger, which was filled pretty much immediately.
I did enter this on a breakout, with defined risk, a target and exit rules, and I feel good about it, but I do have a bit of a nag in the back of my mind, wondering if I rushed it or took the trade just because I told myself to take a trade. On the other hand, though, I eliminated a lot of stocks I didn’t like, and focused on this one because I saw something… I feel good about it, but with my relative newness in options, I’m not 100% sure I made the decision for the right reasons. But what are the right reasons? I followed a plan, I’m just in my head. I planned the trade, I liked the trade, I executed the trade, and now whatever happens, happens. I know my risk, and I understand there’s definitely the potential that my risk is realized and that has nothing to do with whether I’m a good trader or not. I feel like I’m trying to talk myself into this trade, but more, I’m trying to re-convince myself that I do know what I’m doing, because I need that if this is in fact going to be my career.
Exit – 3/8 – $1.52
I left a trailing stop for this yesterday, but I forgot that I had it set for DAY rather than GTC, so this morning, it was no longer on. I’m not sure what would’ve happened had it still been.
I re-set a trailing stop for $.25 behind price again, and went about my day. I looked at my phone not long after and saw that the order had been filled. It looks like the market price was $1.72, and I got filled at $1.52, so if I’m reading that correctly, That’s pretty far off of market to exit.
That said it was a trailing stop order, so that suggests to me that I was one of the few sellers at that high of a price. Something to think about going forward — and another reason I (think) I’m happy with my waiting for .5R rather than 1R.
I might have to use limit orders, or simply have to live with the fact that my orders are going to get filled at not-as-good prices due to the nature of my trading right now. I’m also wondering if it would be a better strategy to wait for 1R since, clearly, price can be volatile. Extending it would give me more room to breathe in the trade, but it would also force me to hold longer, and would potentially set me up to lose more — actually, it wouldn’t, because I’d still have my mental stop-losses and time-stop-losses.
Hmmm. I’ll stick with .5 for now, and hopefully remember to broach this with someone I talk to about trading (that said, one of the major questions I have is about exit strategies, and this rolls right into that).