Monday, January 08, 2007

Closed out RIMM calls

This one sucked.

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1. Why did I take this trade?
Because the stock was showing all the signs of a classic breakout pattern.

2. What was the initial stop?
Initial stop was to exit the calls if RIMM fell below 139.6.

3. Why did you exit where you did?
Because I was going into this morning session with a bit of a bearish bias. I was scared out by the morning selloff. I basically ignored the strength of Friday's move.

4. Is there anything you would do differently?

Forget about the opening selloff - that's just noise. Wait to see if RIMM would breach the 142 and 140 level. It just wasn't in my head to watch those key breakout levels, so I got scared out at the first sign of possible trouble. RIMM did break below 142, but that was met with a wave of buyers to push it back up above 142, confirming the strength of this breakout.

Although I did not lose money on this options trade, I left so much money on the table that I realistically could have captured
(RIMM calls were up to 8.6 at one point), that it has to be considered a screwup.

UPDATE: the stupid side of me made a brief appearance today. It made me go and buy RIMM calls (Feb07 150's) @6.5, when RIMM was near its morning highs and sell @5.0, when RIMM was near the low of the morning pullback. Loss was amounted to few hundred dollar loss.

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