I want to talk about standing firm on limit orders today.

music selection:  “Spoonman” — Soundgarden

I have a small speculative position in Seabridge Gold (SA).  It is a small mining exploration company with promising drilling results.  I have 362 shares at a cost basis of 4.60.  Shares currently trade for 13.95 (I’ve done quite well.)  I hatched a plan earlier this week that I’d be willing to pick up 300 more shares at 9 dollars a piece if I could earn 12% annualized on the puts.  I tried three times to sell SA160520P00009000 for an acceptable premium.

My limit orders never filled.  They were a few pennies off the bid but I stood firm, unwilling to fall below my 12% target.  A lizard with an itchy trigger finger (I was that lizard in the past) would have given up yield or tried a higher strike with less downside protection.  I’m here to say, “Don’t do it raptors!”  Stick to your guns.  Patience while stalking prey is the Raptor Way.  There are always a lot of attractive trades available in the market.  Take or good one.  Or none at all.

Devour your prey raptors!

Sharing is caring!

Sometimes you walk away from a trade

Never miss another opportunity to devour prey!

7 thoughts on “Sometimes you walk away from a trade

  • April 8, 2016 at 8:12 pm
    Permalink

    It is good to have a plan and stick to it. I actually do not calculate a yield when I write options. I look at the delta and graphs to see where there could be a support.
    Wy is this 12 pct so important to you?

    Reply
    • April 8, 2016 at 9:15 pm
      Permalink

      Amber tree, it could be another number so long as I stick to it. I go with 12% because I lose 3% or so taxes. So my net gain is 9% or about the long term average of just indexing myself to the S&P. If I’m not at least matching that performance, I’m better off indexing. I suppose I could go with a lower thresh hold and higher downside protection in my tIRA but I mostly buy and hold insurance companies there.

      Reply
  • April 10, 2016 at 7:20 am
    Permalink

    Thx for the feedback. I have no specific return goal on my option writing. I do not need real cash set aside for my option writing. I see any in come as additional income, a bonus if you want.

    Reply
  • April 11, 2016 at 7:29 pm
    Permalink

    I have been selling puts on SA for the past few months. Have only been put 100 shares as the 7 and 8 strike prices I have been using are now too far OTM. The few I have left will expire soon. Probably won’t write a covered call as the shares are kind of like a tiny lottery ticket.

    Had you listened to the interview with the CEO (Rudy Fronk?) from last Aug/Sept when he spoke of the “nothing short of spectacular” find they came across when drilling? I have no clear idea on valuation for mining companies but it seemed safe to sell some OTM puts for income and/or a good entry point.

    It is hard to let this continue to move away. Your line of “patience while stalking prey” made me chuckle, it is always a battle…

    Reply
    • April 11, 2016 at 9:00 pm
      Permalink

      It made another nice move up today. I reduced my trailing stop loss from 50% to 33% to preserve some gains. I may give up some upside but this is a “gravy” position.

      Reply
  • April 12, 2016 at 1:31 am
    Permalink

    Hi Lizzard King!

    I’m the itchy finger here, as soon as it’s placed I move it around and “chase” :(.

    Do you target a % of single names not exceeding account size? Say I find it hard to sell 1 put when exercised represents 10% of your account. Therefore, do you only target small priced names? Having so much exposure to one name cannot be good.

    I’m looking to start a blog of my own to track my trades !

    Reply
    • April 12, 2016 at 3:41 am
      Permalink

      JW, I target about 10,000 exposure per name. So I rarely write puts over 100 strike. Good luck with your own blog. It is a powerful tool to keep you intellectually honest with yourself, I have found.

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.