I sold my MO spread for a loss.

music selection:  “Candy’s Going Bad” — Golden Earring

On 12APR2021 I bought a bull call spread in MO at the 50/52.5 strikes and 18JUN2021 expiry for 1.35 a share across 37 spreads.  The spread was in good shape until Biden announced a plan to regulate nicotine in tobacco products with a goal of reducing the amount to a non-addictive level. MO tanked.  With 53 days left to trade I needed an 11% rally to recover.  With the bad news hanging over the stock I couldn’t see it happening.

I sold for 37 cents.  The trade was in force for 15 days and loses 3,626 or 72.6% of my capital at risk.  It hurts to take a loss like this.  I’m committed to reporting my losing trades so newbies don’t get the idea that options investing is risk free money.  You pays your money and you takes your chances.

Devour your prey raptors!

Capitulate Altria (MO)

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3 thoughts on “Capitulate Altria (MO)

  • April 27, 2021 at 4:51 pm
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    Funny thing is MO only fell to early March levels when its whole future was put in jeopardy. Switch sides and do a bear spread?

    Reply
    • April 27, 2021 at 5:09 pm
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      I think MO will survive even a non-addictive product future. They have moved strongly into ‘reduced risk’ such as vaping; and are making moves around the fringes of cannabis to be poised to strike when it becomes legal in the US. Imagine a Marlboro branded THC product line… A non-addictive level of drug would presumably mean litigation to remove their advertising prohibitions. The marketing machine will spin into overdrive as they offer lots of alternative “flavor” products. It will be a bumpy ride though.

      Reply
  • April 29, 2021 at 7:01 pm
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    At the moment the MO premiums seem low in both directions.

    Sorry it went that way; thanks for the full disclosure.

    When the world blew up in early 2020 your portfolio looked bleak, and you’ve built it back up amazingly well. It does hurt but your gains have far outstripped your losses and that’s saying a lot.

    Reply

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