Thursday, September 19, 2013

Cover short calls BA XRT

Cover short BA Sep 120 calls @120.1
Cover short XRT Sep 83 calls @83.1
Both Boeing and the retailer ETF advance beyond my strike price so I cover. Boeing at a break even loss, XRT for a break even gain, because I was short puts on both as well. Basically, a whole lot of nothing for me, the broker and exchange made their money though. Being short calls when the Fed makes a surprising move can be a painful place to be. Yes, I could have covered yesterday, but I did not and it cost me the tiny profits on these trades.

Net long APC GLD SPY

/edit to add: looks like I closed my positions at a bad time (again). It happens. In my mind, better to be out near break even than risk having a winner turn into a big loser. The psychological damage from those kind of losers is often worse than the financial damage. Selling naked options tends to involve the possibility of huge percentage losses. One analogy is picking up nickels in front of a steam roller. Play long enough, be bold enough and a person eventually gets flattened with huge losses. One rule has always been "live to trade another day." In other words, try my best to avoid account busting losers. Risk management, position sizing, are ways to do this, even if each individual trade often involves substantial downside risk on big moves.

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