I am Feeling the Pain of Getting Slap on Both Sides
After I bought 1000 shares of BAC yesterday at $12.76 S&P downgraded 18 US Banks today. The news together with FedEx’s depressed earning report drag the market down. The Dow was down 30 points not long after opening. It came back up in positive territory later. Inflation was in check but it does seem to help. Bank of America dropped more than its peers. I feel I am getting slap on both side of my face. A couple days ago I lost more than a thousand dollars by shorting BAC. Now I lose again because I am buying BAC.
I think Bank of America dropped more than its peers for several reasons. First it rose substantially for the fast couple days. The higher it flies the harder it drops. This rule seems always apply. Option expiration this week also weight on price. The max pain for Bank of America June option is $11. There is a popular view that stock price will trend toward the max pain when option expiration is getting close. The view is based on that institutional traders will manipulate stock price toward max pain so that they can maximize the profit they get on writing options. Bank of America has other reason to go down because the trading price this week will determine the prefer share to common share conversion price. I believe Bank of American doesn’t want to set the price too high to dampen the conversion interest.
But As I mentioned previously I expect BAC will rise after the conversion. That’s one of the reason I am still keeping it. In addition to BAC I also bought Patriot Coal Corporation (PCX) today. I bought it at $7.55 so I lost a few hundred dollars on this one too.
My account balance is not going anywhere one month after I setting up this blog. I really hope this blog can provide values other than entertainment. I don’t know where this blog will standard a few months later but I truly hope this is a long last endeavor.
My account balance stood at 28,807.69
Account Balance Changes: -$920.30
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Well, day trading isn’t easy. Markets do not give away money just like that and they are against you. If you made $100 means you took it from somebody else. You are basically trading against sophisticated software and vicious professional traders. They will do anything to move the stocks to their advantage and flush out the weakest. Good old Buffet style investing is long gone and greed and fear rules the markets more than ever. Stay long on your BAC, it will eventually bounce back, good thing you didn’t panick when it hit $12 toady
I actually just sold it at $12.70. Should’ve buy more close to 12 but the put position I have on BAC hold me back. Holding options position is not fun. Two more day to expire and I will be releaved
I got back in at $12.52. I think it worth to hold pass the conversion. What is your take?
I am not touching bank stocks anymore, to volatile and unpredictable. I got burned really bad on them. I am sticking with couple tech stocks and that’s all I trade.