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Trade exits – TASR (+3.11%), AMZN (+9.54%), AAPL (+3.54%), FCX (+3.07%) Happy Friday Expiration

This week trading was definitely something. It was erratic and crazy. I had some trades which were good, turned bad, ugly, and great again. All in one week! So what happened and what trades I had or could take off the table? Let’s take a review.

FCX logoFreeport-McMoRan Inc. (FCX) – This was a great trade I opened in May 2014 and it had August 2014 expiration. I could close this trade this Friday as it already lost all its value. I sold a put against this stock and collected $100 in premiums. On Friday I could buy it back for $5 and thus close the entire trade with $95 premium banking in +3.07% profit. Not too shabby.
 

Amazon logoAmazon (AMZN) – Even better trade than FCX one. I opened this trade three days ago, on Wednesday last week. It was a bull put spread and I was expecting the stock to end above the higher (short) put option strike, which was $355. At first this trade was great and it seemed to be going for a great profit in three days. Yet at the same day, in the afternoon, the trade turned bad and the stock ended below my strike price.

On Thursday the trade turned ugly and it was apparent that this trade will not end well and that I will have to roll it away. I think there was a pattern in this trade. I noticed that whenever I take a trade which is about to expire in two to three days, it always turns bad on me. It is like my trades need time for them to end well and taking ultra-short time trades turn nasty. I was so mad that I turned off the computer and stopped watching this trade completely. I was determined to roll it, but I decided to wait for Friday and roll it at the end of the day. What if, right?

Well, on Friday the stock spiked up and ended well above $355 strike making this trade great again and I was able to collect the entire premium as it expired worthless. I banked $148 premium (+9.54%).
 

AAPL logoApple (AAPL) – Apple was a disappointment to me. If you remember, I tried a directional trade and bought calls. Apparently, I am not good at trading long options. The trade turned bad and I decided to protect it. I opened a protective short call trade to offset the loss in a long call trade. On Friday, after a big pop in price I decided to close the trade with a profit and I bought back my protective short call. This trade offset my loss in a long call, although not as much as I originally planned. I opened this trade collecting $105 premium and bought it back spending $45. With this I banked in $60 (+3.54%). This offsets my loss in long call trade a bit. The original loss was -$205, now the loss is only -$145.
 

TASR logoTaser Inc. (TASR) – This trade is a lot complex than it seems. I sold a put contract against TASR sometimes in May 2014 at 18 strike. Then I failed to recognize problems in this stock and decided to defend the collected premium at all cost. I rolled this trade down from 18 strike to 13 strike. I was hard and I was forced to be selling more contracts in order to keep the trade a CREDIT trade. I also tried to keep the trade staying in September month rather than moving it further away in time.

At 13 strike the stock seemed to consolidate and I decided not to roll. Another mistake. When the stock failed again I at least was brave enough to open a few bearish trades.

One bearish trade against TASR was selling calls at 17 strike against my short puts turning this trade into a short straddle. It worked well as the stock fell deep close to 10 dollars a share. I collected $1,460 in premiums which perfectly offset my loss in short puts (at that time my loss was $1,945). On Friday, the stock seemed to consolidate or reverse the fall. My indicators showed the first day as changed momentum. Although the stock and trend is still heavy bearish, Friday was a change in the selling pressure as the stock moved from $10.46 up to $11.36 a share. This strong move could be just a move influenced by a market creating a fake bull trap, or a true change in direction (a beginning of it). We will see in coming weeks how this trade develops. If it resumes selling I may open new short calls against TASR to further collect new premiums.

So, I bought the short calls back, in case the bull trend continues next week ending this trade with a nice premium of $704.38 ending with +3.28% profit.

I also bought two puts against this trade trying to get better return, but once again, these two trades proved that I was bad at buying options and that I should stay with shorting options strategies. Although one trade ended with 9% profit, it is relative as it actually was only $10 gain. The second trade was a loss of -$2.94%.

In average, my TASR protective trades ended positive with +3.11% profit.
 

And of course, I reaffirmed a lesson – do not buy options. Sell them.

Happy Trading in the next week.
 
 





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