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!
Capitulation in General Electric (GE)
Maybe it’s time to simply go long GE at current levels, options aside.
It might be a good entry point for you. For me, it is an exit price. Ouch.
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 ?
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…
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.
Nobody promised it would be easy!
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.
Glad you have an approach that works for you.