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Sold the XBI $240 calls again this AM for $6.00
fingers crossed. Trying to work this trade down.
Amy
Lessons from mistakes are usually better teachers that constant success. It keeps reminding us how we can’t run blindly into anything, no matter who recommends it!
Amy
Valerie
I don’t follow support and resistance levels. It’s just not something I’ve ever been effective at. The owner of this site seems to have a knack for it. But I also think that from following this site for several years that Teddi won’t mind a differing point of view.
Valerie, you said in another post that you had an OptionsXpress account. That’s the broker I use, so knowing that, I would just like to offer a different look at things.
You have been interested in GMCR so I would like to use that as an example. Go to your optionsXpress account and open streaming charts to a 2 year weekly chart. Set up an upper study to a 5 period EMA. Then set up another upper study to a 52 period EMA. Now set up a lower study to a MACD set at 12,26,9. This resembles a tactic Teddi uses, I just use differing time points. The theory is the same and it’s a good one. You can find it in one of Teddi’s trading tactics.
I won’t go into the actual way I use these indicators as there is no room here. The point I want to make though is below.
A quick look at that chart will show you several things. It will show a stock that was in a solid uptrend until Dec of 2014. It then softened for a bit and then broke to a confirmed downtrend around Mar of 2015.
You may be a short term trader (and there is nothing wrong with that) I’m a long term investor and so this is my mindset. . . I trade among the same stocks for years. The stocks come and go from the “pool” but I generally stay with the same stocks or ETF’s in the pool. There is great value to knowing what you are investing in.So a 2 year chart as we have here is not the way I start. I start from a 5 year chart and work my way forward when looking to put another stock in the pool. Having said that, go up and click to a 5 year chart from the 2 year chart that we have. And what do you see. The 2 year chart that looked quite good now looks like the teeth of a shark that is about to eat you alive. At this point do you really care what the support and resistance levels are? It can be done but there is a much easier way.
As to where resistance and support is, I just can’t see it, nor do I care. What I can see is the defined directions in the price of the stock and that is all that matters to me.
So take this one step further and go up and plug in Mastercard (MA) to this 5 year chart and tell me what you see? You see a completely different chart. Again, you may have a short term horizon on you stock positions and that is certainly okay. So this may not interest you. But what I see is a stock that is very tradable. You can use strategies that Teddi outlines here to just walk this stock up. When it corrects, which they all do, without exception, you can apply rescue strategies quite readily. Other examples are CVS, MO, XLV, and XLP. Just to name some that are in the pool.
My horizon is long term. I’m lazy by nature. I don’t want to trade in and out of positions. I have positions that I work for years on end. Mastercard is exactly the type of stock I invest in.
Support and resistance are ways investors try to anticipate price direction. I prefer just to watch price direction itself. It simply takes a variable out of the equation.
Jim
well, if anyone is interested in how I am handling this, sort of flying blind, but yesterday I sold the $240 calls for a much higher premium, $5.60 I think. Figured I could average the two which I know isn’t recommended but I often don’t do a lot that is recommended:)
Today, at the low, I was able to buy back the calls with a $600. profit, so now I am down to the first position. IF we go back up to $240, I can re-sell calls again.
I will post the “final chapter”….. only to maybe give someone else some ideas when they get stuck doing stupid things.Amy
Valerie
I don’t understand how you ended up with two calls or why you would roll them “out” at this point rather than just down. I thought your post had said you sold one Jun 88 call for 1.45 Since I don’t understand your position I better just mind my own business.Please don’t misunderstand me. I’m not being critical, I just no longer understand you position. The nice thing about investing is that there is in fact no correct way. What works for one investor will not always be right for another investor and yet you can both end up at the same destination.
And yes, I’m going to take a look at your other post on support levels. I don’t deal in support levels so I may learn something.
Jim
Valerie,
I’ve been with OptionsXpress for a number of years. They’ve had a few “hickups” but overall I’m pleased with them. The trade execution is just outstanding.
I’ve been watching GMCR, with your rescue strategy in mind. The 88call is losing time value quickly as the price is dropping and it only has two weeks left. At the time I’m writing this you could roll down to the 85call in the same month for a net $77.00 minus commission. Never forgetting to adjust the stop on quote to buy at about 84.80. The drawback here is that the roll will raise the possibility of tripping that stop.Did anyone else enter this trade? I am trying to decide whether I should add, which would lower my cost basis, or roll?
Amy
jim,
I agree with you. Rescuing yourself out of a mistake teaches you sometimes more than the success of an overnight flip. I don’t think I have ever asked Teddi for “advice” on a rescue. I have learned enough here to figure things out creatively. I loved your write up. Great job of helping others!
Amy
Kikib, I know it sounds crazy, but I think rescue strategies are actually fun. It becomes a challenge to work them. And I get great satisfaction out of seeing them work.
I don’t like GMCR but don’t take that personally. I think it’s a tradable stock and with some time you can work your way out of this.
Keep posting and let me know what your status is.Jim
Kikib, what did you end up writing and at what price? Don’t forget to place a buy order just a bit below the price you wrote at.
Jim