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Capitulation in General Electric (GE)

I’ve been stopped out of GE.

music selection:   “Irresistible” — Fall Out Boy

I was assigned 300 shares of GE on 13APR2017 at the 30.50 strike.  Shares have performed poorly since.  I was stopped out of my 25% trailing stop loss of 27.68 as of yesterday’s close.  I sold at 27.21 realizing a short term loss of 987 dollars.  Over the duration of the trade I collected 1.06 in options premiums reducing my loss to 669 dollars.

It always hurts to take a loss but I’ve learned you have to cut your losers fast to keep them from turning into disasters like the time I lost over 90% on Vanguard Natural Resources (VNR).  Respecting stop losses is the Raptor way.

Devour your prey raptors!

 

{ 8 comments… add one }
  • DivHut May 19, 2017, 6:33 am

    Maybe it’s time to simply go long GE at current levels, options aside.

    • The Lizard King May 19, 2017, 4:08 pm

      It might be a good entry point for you. For me, it is an exit price. Ouch.

  • pacer45 May 19, 2017, 6:08 pm

    This one confuses me…how is that 25% ? from the 30.5 to 27.68 that’s less than 10% down. Was there some mix up on your math counting the loss for 300 shares but dividing by the original price on 100 ?

    • The Lizard King May 20, 2017, 2:16 am

      It’s a trailing stop loss. So I adjust up with upward moves and for payments received such as dividends or options premiums. At any rate, I’m out…

  • Chris B May 19, 2017, 8:46 pm

    I’ve always been torn over buying or selling in response to price changes.
    On the one hand, market risk is almost like a random number generator, and the best you can do is hold winning hands while folding losing hands. I’ve certainly held some things too long.
    On the other hand, if a rationale existed to buy an investment at $X, and the market price drops to $X-Y, wouldn’t it have become an even better, less risky investment that you would be even less inclined to sell? That rationale – the future earnings or cash flow stream – is not so much affected by market swings, so why sell in response to Mr. Market’s gyrations? My grandpa used to brag about holding his small-caps while they lost 2/3rd of their value, only to recover completely and then some. Only now do I understand what he was bragging about – committment to strategy.
    I suppose it’s the difference between being a Benjamin Graham buy-n-hold value investor and having a trader’s mentality. You can’t pursue one strategy with the other mentality.
    This double-mindedness is hard to pull off for those of us with both speculative and long-term portfolios.

  • Luis May 22, 2017, 1:04 pm

    I would prefer to maintain shares and write OTM far-dated calls to avoid selling stock at low price; at the same time, write cash-secured puts with monthly-basis to lower the purchase price of shares. Simplily, I would wait until stock is recovered, taking cash meanwhile from options selling, and preserving capital. Sometimes bursts only last weeks or even days, that is the reason.

    I have done this strategy with E.ON and RWE (German-based electricity companies) since 1 and a half year ago: E.ON is now earning money, and RWE will start to gain this month.

    Regards.

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