Trade the plan dummy...

It never fails to kick me in the butt when I deviate...or perhaps while I am establishing a new plan and had not accommodated for an eventuality. In this particular case I cannot complain too loudly though.

The setup was a recommended trade that was a combo trade, buying a call and selling a put in order to create a net credit. I cannot sell the put and I don't know if I would anyway, too risky, but I entered the long call side. Recently I decided that I would not enter trades that were setup this way as the put made money right away so the long call was a lottery ticket...it was less likely to be counted upon to move up, or so I found out.

I had a nice trade in SWY as I got it for 50 cents. I bought four calls, March expiration as the plan was long termish. I sold them on October 13th following the runup, sell on strength I was thinking. Get out of this trade as I would not likely have entered it in the first place knowing what I know now.

Having said that I had a 100% gain clocked in as I sold it for $1. What my plan has been was to sell half of a position to lock in a break even and let the rest ride. In this particular case I made a note to follow the recommendation lead, which I could have done with the second half.

So, fast forward to today. Within moments of the open the price of the stock jumped over $1.50 and the price of the option jumped to $2 bid. I had a triple gain had I held for just a couple more days.

So, not entering the trade was the first rule, exiting half at 100% when there was no defined sell trigger yet to let the rest ride, but using my bias against net credit trade setups skewed my thinking.

Like I said though, I turned 100% on the trade anyway, so I may kick my butt a bit, I really have no need to lament about a trade missed completely.

Another trade that I didn't take closed today, after 3 days. It was a small net credit and today the calls alone are up 100%. Maybe I will re-consider my entry into these credit trades and perhaps just use very small positions to play them, 1/2 size. That change is TBA. Meanwhile I am doing well as I have closed a number of trades for profits and my daily average return ratcheted up a bit.

Jeff.