Option Sell to Close LESSK

This morning about an hour after the opening bell we sold the LESSK options at $0.40 for a 66% loss. The impulse entrance to this play also had an impulse exit — a gut feeling indicated that the markets were going to rally today. The dow ended up 198 points.

Lessons learned:

  • Stick to the strategy. The purchase of this option was done too far below the 30-day moving average. One of the technicals we look for are crosses through this moving average.
  • We are not day traders. We don’t make snap decisions in the middle of the day to enter trades. We had already planned the limit order ahead of time. Let it exit as it did and call it a success.

Earlier this week, the Dow Jones had nearly reached the lowest point of the year. If this is now the beginning of a general uptrend in the markets, we will be seeing some call option plays soon.

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