It is worth noting that one service has performed better than my trading, but that may be partially due to lack of trades on my part and missing some of my own key triggers...but I digress.
They posted an advisory on Wednesday last week about unusual call buying activity and recommended to follow the institutional buyers in that move. I placed the order but the price had already moved ahead enough for the option to be up by 5 cents... I decided not to chase it at all. Instead I made the order GTC so it would stand and fill on the next pullback.
The news had noted the activity on Thursday. Now, if I read every single news report to try to figure out which ones were good leads I would spend all day reading and likely end up trading my accounts away quickly...I have never believed that trading on news is a good plan. Having said that, trading activity that becomes news is not the same as trying to trade just news and talking head's speculation.
Today, the market pulled back and the order was filled, along with another GTC order from last week from the same service. This particular stock took off today and gained over 7% in the AM, so we'll hang on for bit and see where it goes. The option could easily double and I may set my stop at that point (keeping in mind the stop order executions on the ask, not the bid) but it is expected to quadruple.
It is worth noting that the stock price at the order fill time was around $7.00. The option is the January 7.50 call and today it reached $7.50... the option was bought for 60 cents and now is at the point of gaining intrinsic value as well as extrinsic due to volatility I expect. As the price is sitting at the strike the option is bid at 90 cents, already a 50% gain without any added intrinsic value.
I bought 4 contracts. It certainly is nice to see a quick gain but it may just as easily drop back as quick. Had I been daytrading the stock I would have traded 400 shares (same as the option contracts 4x100 shares represented) and jumped out after the 50 cent mark for a clean $200.
Jeff.
Questrade, My direct access discount broker.
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