Yesterday BABA jumped 12% because the company offered strong future sales guidance. This tested my 135 Calls and caused my neutral position to immediately get short. Instead of being mechanical and rolling up my 110 Puts when the stock price was around $138-$140, I waited until today, hoping the price would pull back a little. That didn't happen and instead this morning the stock continued to rally to a high of $148. I was able to roll up my 110 Puts to 135, when the stock was around $147, creating a straddle. Then almost immediately, the market turned and the stock slowly declined to under $140. So basically I rolled at the worst time and got the worst price. Lesson learned - stay mechanical and manage trades early. If I had rolled earlier I would have collected a couple thousand dollars more in premium and given myself a better chance to have a positive outcome for this trade.
Rolled: five 21 JUL BABA 110 Puts
- Bought: five 21 JUL BABA 110 Puts @$0.05
- Sold: five 21 JUL BABA 135 Puts @$1.70
Total Commissions/Fees: $6.46
Balance: $42,244.27
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