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Trade Alert: Taking some profits on the SPY calls

October 17, 2014 by Cody Willard

Wednesday when the market was down huge, I wrote the following:

“With the markets down 2% across the board this morning, it’s time for another fresh round of tranche buying of a little more GOOG and FSLR common stocks and I’m also going to add a couple call options on the SPY here — buying the calls with a strike price of $186 from November 2014.” https://tradingwithcody.com/2014/10/15/trade-alert-buying-some-spy-calls-for-a-trade/

The SPY was at about $184 when I wrote that, and it fell all the way down below $183 at one point after I wrote that. That means we were buying out-of-the-money SPY calls. Now with the SPY at $188.65 as I write this, those same call options are now in-the-money, and are up about 100-200% or even more if you nailed the exact bottom in the panic. I didn’t nail the exact bottom on Wednesday but that’s not the point anyway, is it?

The point is that I’m going to take 2/3 of those SPY call options off the table and lock in the gains on most of those “hardest trade to make” profits. Was it hard to buy into the panic Wednesday? Of course. Is it hard to trim those call options today instead of letting all of them run some more and see if the snapback rally continues? Of course. Make the hard trades. Do it in tranches.

I’m selling about 2/3 of my SPY call options that I bought during the meltdown.

Related posts:

Trade Alert: Shorting Valeant VRX at $167/share
Why Stocks Rallied Today + Trade Alert: Bye WORK, Hi More Index Puts + Transcript
Trade Alert: Two small tranches
Trade Alert: Puts on a new name and taking profits elsewhere
Trade Alert: Locking in some 700% gains in my largest position
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Filed Under: Trade Alert

Disclosure: At the time of publication, the firm in which Willard is a partner and/or Mr. Willard had positions in some of the stocks mentioned above although positions can change at any time and without notice.

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This does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or cryptocurrency or token any other product or service by Cody Willard or any other third party. Furthermore, nothing in this is intended to provide tax, legal, or investment advice and nothing in this should be construed as a recommendation to buy, sell, or hold any investment or security or cryptocurrency or token or to engage in any investment strategy or transaction. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your business advisor, attorney, or tax and accounting advisor regarding your specific business, legal or tax situation.

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