Earlier I put a Stop Loss on 10,000 shares of GPRO. I hope I did the right thing because I’m very nervous about this market. Many “professionals” are talking about a big correction. With GPRO up $1.25 today and in the $16.25 area I decided to put a Stop Loss order on 10,000 shares. 5000 I bought on 9/6/16 at $14.40 and the other 5000 I bought today at $15.90. I put the Stop Loss at $16.10 just in case the stock started falling. I did the Stop Loss because I wasn’t going to be near my computer for a few hours. I just got to my computer and I see I was executed on the order. I have a great gain on my stock purchase but I am now left Naked on a $16 Call that is expiring tomorrow. And I have another $16 Call expiring next Friday. This is a very risky move! Especially since as I write GPRO is back up to $16.20. I am hoping the stock drops below $16 for the close tomorrow and my Call will expire and I’ll worry about next week’s Call after the weekend. Even though this is the sale of a stock with a profit, I give this trade a Risk Factor of 5. The trade isn’t a 5, the trade put me in a situation where the positions I still hold are now a Risk Factor 5. Here’s the buy and sell orders for the 2 sets of 5000 shares of GPRO.
9/6/16 Buy 5000 shares of GPRO @ $14.40
9/22/16 Sell 5000 shares GPRO @ $16.10
Profit +$8500
9/22/16 Buy 5000 shares GPRO @ $15.90
9/22/16 Sell 5000 shares GPRO @ $ 16.10
Profit +$1000
The bottom line is, if GPRO drops tomorrow I look brilliant, and if GPRO continues to go up, I look like an idiot!
Remember, my line in the sand is $16.10. Tomorrow if I have to buy back the shares to cover the expiring Call I would want to buy at $16.10 or lower. If I have to buy above $16.10 I’ll be cutting into the profit I made on the sale of the stock. I’m really not worried too much, I’ve been doing great so if I give a little back I think it was worth the gamble. As long as it’s only a “little.”
Steve
The Options Coach