Monday, November 17, 2008

In utter panic, that I have been after not taking the on GOOG's fall, which had piratically doubling my position, I have been trading mostly in panic. I was very disappointed in my self with the last trade, as it turned into a disaster for me. Missing a good opportunity by not selling after good gains. I have been thinking and wishing hard to somehow make the losses go away, but instead the loss is deepening and I seem to be doing everything wrong.

After GOOG went down a lot and I kept holding on to my puts expecting it to go down more (greed as usual), the stock immediately (along with the mkt) turned around and shot high. My heavy position holding puts which were killed by this sudden move. More then anything I was disgusted and deeply disappointed at myself for not acting fast. But even then, somehow I still kept holding on to the puts, still having a belief that the stock will turn down once again. The next day fearing another rally, trying as usual to resist taking a loss, and finally to get back at GOOG I sold higher strike puts against my position. Ironically, the stock did move lower today and the day before and would have reduced the damage by not doing anything just holding my puts.

Over the weekend I had thought about how to remedy this situation under different scenarios.

My plan was:

1. If the stock moved lower I will cover my short positing and leave the long ones. Early in the morning I did follow this plan and sold 2 out of the 6 short contracts while leaving the others intact. Later in the day I did sell another two, thus well positioning my self for the down move. However, when the stock fluctuated I panicked and sold almost all of the long puts as well and also bought 10 call contracts, fearing the stock is moving higher, leaving my puts worth nothing. Near the close the stock moved lower -$10 thus proving me all wrong and killing my account badly.

2. If the stock moved up I would benefit by covering my shorts at a lower price and also adding calls immediately, thus offsetting my losses in the put position. Unfortunately, the stock moved both up and down and I only reacted in a panic.

This time my account has taken a big loss, I have almost lost all my capital and will not be able to trade for a while.