I threw a tiny bit of capital at some Ri…

I threw a tiny bit of capital at some Riverbed calls at strike prices in the low $30s that will expire over the next few months.   Any capital put into such a trade needs to be able to be written off completely as there’s 100% downside if the stock falls from here and doesn’t recover before the calls expire. On the other hand, if the stock can rally just back to where it was last week, I’ll have some doubles and triples in these calls.  But you’ll notice I started this post off by explicitly saying “tiny bit of capital”.

I don’t like to use the term “play money”, but I wouldn’t use any meaningful amount of money (would we call that money “working capital” as opposed to “play money”?).  Meaningful being more than 1% of your stock/option portfolio on any single such trade.  I’m less than 1% on this position, so if it works out, I’ve defined the hit to my portfolio beforehand at 1%.  But if the trade works out, I could add 2-3% performance to my portfolio over the next few weeks.  There you have it — codythought/strategy/trading in real-time!