Friday, July 17, 2009
Expiration Friday
I only had one position affected by today's expiration. A week before June expiration I had sold naked puts on VLO at $18 for .50. That stock went down to $16 so I took possession at a cost average of $17.50. I then sold July $17's for another .50 to lower my cost average to $17. So I will be called out this weekend as we closed above $17 today. So I didn't make any money, but I turned a losing trade in to a break-even trade. This is usually why I try and stick with only selling naked puts on something I actually want to own or wouldn't mind owning. I broke that rule with SLV last month and that's why I just sold it at a loss rather than own it and sell covered calls long term. That's about it for me. If we break through 950 next week I'll be possibly looking to liquidate my 4 long call spreads, and the closer we get to 1000 I'll probably by some 1-year puts on the SPY as I just don't believe we're going to see anything worthy of being called a sustained rebound. For the most part I'll be in a wait and see mentality for a while and probably making some small moves every now and then just to gamble.
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Sometimes breaking even is as good as being profitable. And small losses are okay to, you had an idea you created a plan and you executed that plan. As long as you stick to your plan and the rules in your trading system. A losing trade is as good as a winning trade. Its a game of probabilities, if we play enough of the high probability set ups and keep our losses small we will be profitable.
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