Tuesday, November 13, 2007

It's only a loss if you sell it

Strong stocks will come back, and POT did just that. Pot made a maneuver similar to this one last August when the market turned downward. I have every confidence that this one will revisit that $125 range.

Like I said yesterday, there was no conceivable reason other than panic and profit taking that people sold this stock Monday. Anyway, by close of day on Monday my contracts were worth about .40 apiece. I have made a deadline to sell these options by close of the market on Thursday. In order to maximize the amount of the investment that I can recoup, I decided to sell the calls in 6 lots. Two lots each day Tuesday, Wednesday, and Thursday. At any time that I can get between $6.00 and $7.05 a contract before end of trading Thursday, I will close out my position. I will use market daily trends to chose the proper time to sell. The first lot of the day will sell the third time I get a bounce off an option resistance level. That happened around $2.50 today, and I got my sell in for $2.30. As the end of the day approached, I had a bounce off $2.60, and sold it when it hit the second time. The last trade of the day was $2.00.

While these sales still netted me a loss from my average in on these calls, I was still pleased with the amount of money I recouped from my closing price on Monday. You have no idea how glad I was that I didn't panic. So, 1/3 of my POT 115 calls have been liquidated, and I have 2/3 more to try and optimize over the next couple of days.

My new rule is that all options for the current month are cashed on the Friday prior to option expiry week. If I want to play options week, I'll play with the following months options. It's less nerve wracking!

I gained back about 30% of yesterdays loss today. My portfolio is still down 28.8% for the month. It will be a challenge to get back into the black before the end of November, and plan and prepare a holiday meal for my in laws on Thanksgiving! Wish me luck!

Good Fortune.

Always perform your own due diligence before making any investment.

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