Tuesday, March 20, 2012

$MA $1066 trade w/charts

3/22:  As of today, it would seem that resetting the position was prudent. 70%+ chance that MA will be under 435 but Apr opex.
btw, if you like these posts spread the word, folo @racernic & peruse the rest of my post including the sides ;-) if you know what i mean; I do these post for free and have no subscription pitches etc. 

2/17: I thought after a long run $MA was due for a pull back.
So I sold a call spread Mar 420/25 for net credit of $765.41.
Obviously since then $MA kept on running and last week, my short leg (420) was in-the-money (ITM) the wrong way.
Instead of buying the spread back and taking the loss, i decided to punt it into this week.
So, 3/15: I rolled my 420/25 Mar spread into 3/25 (weekly) 425/30 spread. The roll gave me another $26 credit.
3/20: $MA dropped almost $6 but since I have had bad luck timing this trade I decided to not take the chance to get caught short in a weekly short call spread ITM.
So, I took advantage of this drop to roll it again into April position.
I rolled the 425/30 short weekly call spread into a short April 435/40 call spread.
This netted me another $375 credit.
So far, i have taken in $1166 in credit. Should MA close at or below 435 by april 20 I will close this position for max profit and keep most of the 1166 if not all. If MA keeps running I will then again have options to stay out of trouble.
Lesson: Not all trades go as planned. So, when I put a trade on I make sure to structure it in a way that leaves me with options in case of trade sours. It is important not to panic and take advantage of price changes to reset bad trades. Ideally I wanted the 420/25 mar short call spread to expire for max prof but that didn't happen so I acted on it twice already.
Sure I had the option to wait another day and hope that MA would continue to drop but i don't like to depend on HOPE too much.