Sold My Inseego Shares

I’ve been worried about today the entire weekend. The coronavirus is growing in China and we have a few cases in the U.S. I think the world health organization will get this under control but I was worried about the panic it could cause with the markets. China is already closing many public arenas, like their Disney Park. And many fast food, and other restaurants might follow, among other businesses. If they don’t get this under control soon it will affect their economy. If it affects their economy it will affect our markets.

As I mentioned in my week ending report, if selling starts, which it has, it will trigger computer selling of the “big boys”, hedges funds, brokerages and other huge investment companies.

I’m not in a panic yet, I’m just stating the obvious. We’ve all seen panic selling before.

Looking at my trading account I’m really not worried about to much. Most of my positions I have no problem holding through a pull back. I will not touch anything in my Wealth Builder portfolios. I’m in them long term.

Today I did sell one position. I sold 1000 shares of Inseego (INSG). There are a few reasons why INSG didn’t make the cut today. Let’s take a look.

I work on margin. As my holdings go down I do not want to have a margin problem where I get a margin call. I sold a position to free up some cash to ensure I don’t lose position I want to keep.

I want to pick the positions I sell, not my broker. INSG is not marginable. When you buy this stock you have to lay out the entire investment. Selling a position that is not on margin frees up the most amount of money.

I have a nice profit with INSG. I’d rather sell a position with a profit than a position at a loss. With this sale I profited $2700.

I was reading a report that INSG was a heavily shorted stock last week. This means many investors feel the stock will go down. I’m not a believer, I still love the stock. But if I had to sell something it might as well be a stock many feel is going down in the case they are right.

Like I said, I still love the stock. I will be back in. I probably will not buy the stock, I think I’ll be buying the LEAPS options when I feel the time is right. As I write the stock is at $8.30. If I buy 1000 shares of the stock I’ll lay out $8300. I have to lay out the entire $8300 because you cannot buy on margin. If I buy the LEAPS I’ll buy 20 contracts of the 1/21/22 $10 option. The Delta on this option is .62. This means the option will move 62¢ for every $1 move in the stock. If I own 20 contracts thats like owning 2000 shares of the stock. If I owned 1000 shares and the stock went up $1, I’m up $1000. With my 20 contracts at a Delta .62, I’ll be up $1240. Right now the 1/21/22 $10 option is selling for $2.70. If I buy 20 contracts it will cost me $5400 and if I buy the 1000 shares it will cost me $8300. With the LEAPS I lay out less money and make more money. And this option won’t expire until January of 2022. This is why I say I’ll buy the LEAPS instead of buying the stock. If the stock was marginable I might buy the stock.

I hope this make sense. If you have any question please send me an email. LEAPS are a very powerful trading tool.

10/28/19 – Buy 1000 Shares INSG @ $5.60

1/27/20 – Sell 1000 Shares INSG @ $8.30

Profit +$2700

Not a bad way to start the week. Especially on the worse day of the year. I held INSG for about 3 months and my return is 48%.

I’m gonna need a little bounce back to get some trades in this week. All my stock holding positions are down so it will be tough to sell Calls.

It’s days like this where risk tolerance comes in. If you are invested, how does your stomach feel? The gut will let you know what your risk tolerance is. Good luck! It will get better.

Successful trading,

Steve

The Options Coach