I May End up Holding a Bag of Financial Shares
Sometimes you really have to believe some of the popular theory. The option pain theory says that stock price will trend toward their max pain when option expiration day get close. I sold 20 contracts of BAC June 12 puts last week and 10 contracts of USB June 17.50 puts a couple weeks ago. When I sold the put on BAC it was around $12.90 and running up and I felt it was pretty safe. When I sold the USB puts it was at around $19.00 I felt it was safe too. But look at today’s after market BAC is trading at $12.26 and USB is at $17.74. BAC’s max pain is $11 and USB’s max pain is $17.50. So they are trending toward their max pain.
If BAC drop below $12 and USB drop below $17.50 I will probably end up buying 2000 shares of BAC at $12 and 1000 of shares of USB at $17.75. Including the 1000 shares of BAC I am already holding I would probably end up holding 3000 shares BAC and 1000 Shares of USB by the end of this weekend. I prepared for that or I have to take lose by buying back the puts. I will know in a couples days.
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- Trader’s Mind is Full of Dilemma – My Thought Gone Wild With Bank of America
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Do not trade with emotion…You will lose every time…I have learned that lesson the hard way many times.
Today the s&p broke below the 20MA, a doji was formed on the daily charts, so I expect a bounce to about 823 where we’ll have horizontal resistance.RIMM reports tomorrow not sure about what time, i hope that it has some good guidance. I’m holding FAS,MTXX,and,JASO hoping for a turn around. I would hedge your long portfolio (if you have one) or reduce equity exposure and get rid of margin at this point. instead of 1000 share go for 500. I’ll be traveling tomorrow so good luck. P.S if we break below 900 we’ll go straight down to 850.
Thanks!
Never can you trade with emotion you have to trade with your mind. You have to be able to handle the composure of both the wins and losses if you truly want to be successful in the industry. Not everyone is cut out for the trading world.