Options Trade: Nymex Holdings, Inc. (NMX)

Read Full Post.....

1. Why did I take this trade?
It was going up, and I was itching for an options trade. I bought Nymex Holdings, Inc. (NYSE: NMX) Mar07 140 Calls when I saw some big blocks come in at the bid. Probably not the best reasons, in retrospect.


2. What was the initial stop?
The initial stop was 128. It was briefly hit soon after I bought, but soon went back up.


3. Why did you exit where you did?
This morning, ICE was looking pretty bullish, and I felt that NMX would ride on ICE's coattails. I wanted to sell into strength, and no longer cared if I left additional profits on the table, as I was more focused on not making any more mistakes on this trade. I put in a limit sell of 2.30, and was pleasantly surprised to find out that someone took my offer about 15min. later.


4. Is there anything you would do differently?
Yes.
The entry was poorly executed and could have costed me a lot. I basically bought at the ask. The bid/ask at the time was 1.50/2.00. I screwed myself on the entry by buying at the ask. From now on, I will walk up the bid in order to get a better entry or look for options with smaller spread. By that I mean I will start at some discretionary price higher than the best bid, and start incrementing my bid until it gets taken out. I did this before with GROW and got a good entry.

In any other set of circumstances, I would not consider this a screwUp. But, in light of my new set of circumstances, I need to consider this a screwup so that I will push myself to improve and cut down on my mental errors.
ScrewUps are more memorable than victories anyways.