You Win Some, You Lose Some

Today I was a victim of a potential fake-out by the market. While on a break at work I logged into my brokerage account to see that I had been stopped out of one position and stopped into another. To prevent too much loss of my principle on my new position, I quickly did the math and set my stop for it, using the execution price as my base price. Next come the details.

The position i was stopped out of was my FPL Put. The price movement of FPL rose above the trend line momentarily today just high enough to cause my stop to trigger, only to close the day under the trend line and low enough that the Put option price would have been acceptable to me. Those are just the breaks. next week I will see if that was truly an effective strategy or not.

The position I was stopped into was my CVX Put I mentioned in my last post. It's price movement moved low enough that I was able to acquire it. However, when I saw it, it had already started to retreat from that price. So I quickly did the math and set my stop order to prevent any excessive loss. After the market's closing bell, I was able to again log into my brokerage account and I am having a little deja vu. CVX also moved enough that my stop was triggered but then reversed enough that it would have been acceptable to me.

Looking at the charts for these two stocks, I see that FPL may simply have been a fake-out and CVX appears to have done the same thing. I will have to wait until next week to see if this was a real reversal or not. These are the kinds of things that make setting a stop frustrating. I keep thinking maybe I should set my option stops according to different standards, but then I have to remind myself that I don't have the capital to experiment so much. So we have to remember, 'you win some, you lose some. Let the winners run, and keep your losses small.' That is my opinion, you can take it or leave it.

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