So am I the only one today that is feeling a little left out. I subscribe to a trading and the head trader was calling out good trades and it probably had to be one of the most profitable days that I have seen within the room. But for me…I did nothing. I did not make one trade. Early in the morning I did consider taking the Apple trade with weekly call options, but instead I marked at what price I would have gotten in at and just monitored the trade.
Apple is one stock that if I trade it, it will be for a daytrade or for 2-3 days max. No longer, unless I have an options spread trade on that reduces some risk and lets it move around some without seeing the wild swings of single call or put options. I choose short time periods due to the extreme time decay. So with this specific trade I chose the May 540 Call and would have gotten filled at 7.00. While the option did go negative a little bit from entry it took off from there. Below is a screen capture of the risk graph and profit of $1392.50 (+198%) taken 15 minutes before the close.
Below is a 15 minute chart showing the entry point early in the morning.
So overall I missed out on a nice profit of nearly $1400 trading just one contract. But there are several reasons why I did not take the trade.
As stated, when in AAPL with single call options I look for 1-3 days hold, max. This is due to rapid time decay and the wild swings that AAPL can take. To follow that, I knew that I had other commitments during the day that would take my attention away from the trade and I would not be able to watch it.
Further and one hour into the trading day I made the decision that I will not be active this week, besides a day trade or two. I made this decision knowing that I have a busy personal schedule and if I get over involved here my full attention will not be towards the market nor towards my other commitments. So I will sit back and observe and not feel bad about missing out on some trades I would have otherwise taken. My main goal here is to maintain my mental capital and be ready for when time allows me to fully monitor positions I have on.
I have wrote in a recent blog post on how I am expecting some up and down volatility titled The Markets and Whiskey are More Correlated Than You Think. It basically explains that I am not ready to allocate a lot of capital here as I think the moves will be bigger up and down. The most recent post I like is from @chessNwine and his Stock #Market Recap 05/21/12 {Video}. This has to be one of my favorite recaps as it explains several things to look for and states on more than one occasion that one day does not make a trend….and I couldn’t agree more. I have learned to become more patient (still struggle some) but here I want the market to confirm its move and then I will allocate more capital. I also remember in reading the trading books I have of great traders, not one of them made their money by picking the top or bottom but catch the meat of the trend.
2 Responses to “Feeling A Little Left Out..But Patience Pays”
zenhunter
“…but catch the meat of the trend.”
While simple in concept, implementation becomes complicated when Mr. Greed invited itself to your dinner party…
redman59
Yea you’re right there, goes along with “anyone can read the left side of the chart…” What I do like is that it reinforces the point that one should try to stop picking tops/bottoms and let things develop; but it sure feels good when/if you do pick a top/bottom.