Looks like BBY has entered a downtrend, but not an excessive one, so we could probably enter the trade tomorrow morning. I have abandoned the RRGB trade because the wide spread between bid and ask. Meanwhile, BBY is more liquid, and hence a better trade.
I will report on the trade if filled tomorrow. Please read the news in Yahoo Finance and see if you agree that BBY's earnings warning may be a strong catalyst.
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The BBY was entered and filled early this morning. Here is the confirmation
My account is slowly growing again, here is the current status:
5 comments:
Juan,
Looks good. What is your limit price and position on this one?
Please could you post your current trade positions. Thanks.
Best Buy Co. Inc. (BBY) Option
09-13-05 Sold OCT05 45 Put @ $1.85
09-13-05 Bought MAR06 45 Put @ $3.70
Entry Debit $555.00
Max Profit $3944.90
This is your type of positioning.
Best Buy Co. Inc. (BBY) Option
09-13-05 Sold 1 OCT05 45 Put @ $1.85
09-13-05 Bought 2 MAR06 45 Put @ $3.70
Entry Debit $555.00
Max Profit $3944.90
Hi Fortitude:
I am buying Jan 45 puts. If you go back further to March, your gains will be slower. If the stock is to continue to fall, but slowly, you can profit with the Jan just fine. With the March you are using more capital for the same or worse result. It is an art as we don't know for sure what would happen but compare both trades looking at the lowest capital spenditure to obtain the larger Delta, and smaller Theta.
I always trade ATM, although this is not always the case. I also am begining to understand that smaller companies have larger spreads between bid and ask and that liquidity is low (such was the case with SGR and RRGB), this is a real problem, and I don't feel too bad in abandoning such trades. Part of the game here is avoiding the losses.
Take a look at my Elliott chart. Pay close attention to the larger magenta trapezoid. Shoud that trapezoid be exceed to the UP side, my count would be invalidated and I should be out of the trade. I am, therefore, placing a contingency exit at the top of the magenta trapezoid at $47.75.
I will be entering the position at the opening. I hope to cut a little into the ask, but not a lot. If the stock opens higher, I can wait until later in the day to enter the position. I will be guided by the stochastics in my 60 min chart.
I hope this helps.
Juan
Thanks for the reply.
RE: "Take a look at my Elliott chart. Pay close attention to the larger magenta trapezoid. Shoud that trapezoid be exceed to the UP side, my count would be invalidated and I should be out of the trade."
Initially I was uncertain about what you were referring too, but I can see a fainter lined rectangle, which has a top price on the chart at $47.50.
Although you are referring it as the "contingency exit at the top of the magenta trapezoid at $47.75."
The trade has moved your way today though Juan, so far so good.
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