I would like to average down again today but I already have nearly 5% of my portfolio in Skul.... What to do here? I have tons of extra cash however, but my intent is to save that for the 10-20% dip faber is calling for by early next year....
Any suggestions as to how to play this? November $10.00 calls?
Kevin, I never average down. I never add to a losing position. I only risk 2% in any one trade. That is, I first establish a stop price, then I know my risk. Knowing my risk on the trade and knowing I can only risk 2% of the total portfolio allows me to compute how many shares to trade. But if averaging down is your strategy then I guess it makes sense to buy at low-volume retests of the lows.
That makes sense, and is advice I follow on nearly all of my other trades. I'm only 26, and just recently got a well paying job, so I only started investing seriously in around august of this year. So far, the only positions I have averaged down are SKUL and DDD.
I feel that averaging down on these companies is a good move for three reasons:
-they are strong solid growth companies
-my exit strategy for these companies is to hold for many years
I will let you know that I decided on Nov 12, $12.00 calls. Purchased at the low of today at $1.45.
At that value, the amount of contracts purchased equates to 20% of my stake in SKUL, and makes up 1.4% of my total portfolio.
Since I am young, my intentions are to invest aggressively :P