Tuesday, December 05, 2006

BIDU call options trade - again

I traded some BIDU call options and here is how it turned out:

The list of mistakes made here are so many that I am amazed that my butt was saved by that timely announcement of BIDU planning to enter the Japan market.

First mistake was entering below yesterday's OR high - there was no volume this time, and therefore no reason to enter this trade. Even the break of the OR high was on low volume - another warning sign to stay on the sidelines. But I ignored them and entered anyways.
Why didn't I sell when it dropped right around noon? Probably because I had it in my head somewhere that this was just a normal pullback.
Why did I sell it at today's opening candle? I got too emotional, and bailed at the first sign of what I thought would be a gap fill (of course, there was none). The call bid/ask was jumping around alot in the opening 15min, so I didn't get a good fill on my exit.

Being a glutton for punishment, I decided to play this morning's pullback, but of course, I wasn't patient enough to wait for the break above the OR high. Plus again, there was no volume to back up the pullback reversal, so this second trade should never have been made. At least I had enough sense to keep my losses small - that was probably the only good thing that I did. The thought of revenge trading BIDU did cross my mind, at which point I basically deleted the ticker and went to walk around the house to clear my head.


Simply Options Trader said...

You did the right thing to delete the ticker and walk away. Staring at the screen would have made you go bonkers at that point!

On selling within 15 min of opening bell, I had that experience before. Mostly bad ones. Because the volatility of the option is also jumping around. Many times, I see that I could have sold it off at a better price later even at around the same stock price.

Phileo said...

Hi SimplyOptions,

Yes, I'm also seeing the options price jump around quite a bit during the opening 15min. I've seen this happen in enough stocks to know that it is not a random coincidence. I will be staying away from any options trades (buy or sell) in the opening 15min. from now on....