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Well, disappointing action for me in MSFT calls (despite the stock
being up so much yesterday).
Got into the 135 calls last Thursday @ 5 3/8, close to the low of the
day.
Bad action on Friday, but the 131 level held on a closing basis, so I
stayed with the trade.
Same for Monday, with the Justice Dept. stepping in and MSFT trading
down to as low as 127 ½.
The stock came back to close again above my 131 support (stopping out)
point, so I still stayed with it.
My original plan was to look to sell the 140's or 145's on a rise in
anticipation of the earnings announcement.
We never got high enough on Monday to make either of those trades
worthwhile, even though at that point IV was way up there,\
so I didn't hedge it at all, even though I knew that IV would drop
greatly once the earnings were out. The 135's still hovered in the
high 4's to low 5's range, and selling them out would only lock in a
very small loss, so I still stayed with the trade. The great news on
Monday gapped the stock up on Tuesday, and my calls closed up to
around 7. Usually, I've found when a stock has good earnings news and
it closes near the daily range high on the close, there is a bit of
follow through (1 or 2 pts) the next morning. I figured I'd wait for
that and sell out mid morning (Wed), figuring I could pick up another
half point or so. Well, the combination of Boeing's bad earnings and
the Justice Dept's lawsuit simply weighed too much, and the follow
through I expected never materialized. I had moved my mental stop to
my entry, and disappointingly closed it out at just that, 5 3/8 for a
wash minus commissions.
Well, maybe it wasn't a textbook trade, (it certainly didn't go the
way I expected), but at least I'll live to trade another day.
Steve
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