Portfolio Update

It is one day until option expiration, and the call option I sold against my position on the iShares Silver Trust ETF (SLV) is so in-the-money (ITM) that I would be fall out of my seat shocked if I didn't get assigned. Anyway, I will also be profitable on that position because of the premiums collected against it and the capital gains from the sale at $18 once it is assigned.

Well I finally did it. I sold for a huge loss the 5 call contracts I had for the $4 strike price on Citigroup Inc (C). Although the expiration is not until December, I could no longer deny that it was a loser of a pick. I might be wrong for getting out now, but I was definitely wrong for not getting out sooner. My total loss is about 66%. So goes a lesson in the school of hard knocks. I will not make that mistake again.

In replacement of that loser position, I have decided to take on two put positions. The first is on Brocade Communications Sys Inc. (BRCD). I purchased 2 of the October $7 puts for $1.40 each. When I purchased the contracts I had a one-triggers-other (OTO) trade order set up so that there would be a day only stop of $0.98. The price was chosen so that I don't run the risk of losing much more than 30% of my positions value in the event that I am wrong. I will now be setting up a one-cancels-other (OCO) trade order so that I get out once my target is reached while maintaining a stop so that I don't end up "hoping" for a turn around.

The second position I took today was a purchase of 3 of the October $5 puts against C for $1.09 each. This was also purchased with a OTO trade order that set a day only stop of $0.76. This price was also chosen so that I don't run the risk of losing much more than 30% of my positions value in the event that I am wrong. I will now also be setting up a OCO trade order so that I get out once my target is reached while maintaining a stop so that I don't end up "hoping" for a turn around.

The point I am making is that I am going to follow a plan so that I am not planning to fail. That is my opinion, you can take it or leave it. Disclaimer: See bottom of page. http://investorsopinion.blogspot.com