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American Capital Agency Corp. Message Board

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  • reits_r_us reits_r_us Jan 1, 2013 2:59 PM Flag

    Happy New Year!!

    A Happy New Years to you Ephort!

    Looking back at the roller coaster ride for BP this last year, I bet you had some OH S moments...;-)

    Curious, looking back, could you have come out of your trade with less of a loss at the present time today(1/01/2013), than the loss you suffered, by rolling forward to the furthest back dated contract month at the same strike as the original short Put credit?

    If you don't have the prices, you can give me the dates and the strike, and I can answer my own question. I am in an upside down position now and it would be instructive for me as well, I believe, for others.

    Thanks,

    DocReits

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    • I will report the trade dates when back home (I am still away for the holidays and not on my PC, and not accessing my brokerage acct.). I think I could probably have taken some defensive (or corrective) actions, but my problem was (as usual) that I needed to immerse myself in a project and didn't want to have to deal with one more problem. (Which is why I haven't traded recently as well).

      I am not always able to follow the market minute by minute, or even day by day, and in these circumstances one should not be selling puts. But like all of us, I occasionally break my own rules. I did apply the rule though when it came to selling my usual AAPL puts -- something I happily avoided doing during the long slide. (Thinking about it again though -- a run to earnings?)

      • 1 Reply to ephort
      • Documenting the details of this BP trade is harder than I thought because (a) There were actually more than a dozen round trips involved (b) The individual trades were in two different accounts and (c) for some reason, Fidelity isn't showing the open and close dates in the 2012 "Tax Info" tabulation (maybe this is temporary).

        But, in rough terms, I started with a smallish short put position in the spring of 2012 (in the mid-40s), doubled down a couple of times, and the PPS kept going south. Eventually I got out to wait for a bottom. When it bounced off 36 or so I did do some winning trades, but they were not enough to make up for the loss that came from the very long slide.

        Thankfully, most of the rest of the 2012 trades were positive, which made for a pretty good year. Good trades were in AGNC, PG, JNJ, BMY, SNDK. AXP... (and probably more). The general "system" is to buy slightly ITM calls on pullbacks of "good" companies that there is no reason to believe are going out of business. The short puts on BP were an example of insufficient research -- I mistakenly thought their legal troubles were over. Big mistake.

 
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