Saturday, January 27, 2007

Options Trade: Bunge Ltd. (BG)

This trade actually took place on Jan 23/07.

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1. Why did I take this trade?
BG was a HCPG newsletter selection. It broke out of a textbook pullback from earlier this week. I bought the BG Mar07 80 Calls when BG broke above the mini-resistance @75.75. The timing of my entry was pretty good (IMO).

2. What was the initial stop?
Initial stop was @75.30.

3. Why did you exit where you did?
I had to think long and hard as to why I did not dump at least half of my position when BG failed to stay above 77. I think part of it is due to some lingering hope that volume would come in to drive the price back up. Also, because I bought March calls instead of Feb calls, the move up was not as much, and I was hoping for a bigger move. And I didn't want to believe how messy it became in the afternoon in contrast to how beautiful it moved in the morning. Unlike my options trade in MA, it just came down to a lack of focus on the execution of my trade. Although I did not physically lose much money on this options trade, seeing the potential profits disappear was a big loss mentally and emotionally.

4. Is there anything you would do differently?
Yes, consider selling at least half my position when the upward momentum shows visible signs of stalling out.

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