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.