Google Option - What to do?

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So, the life lesson here is that stop limits and trailing stops should be an integral part of your portfolio, especially for volatile stocks. Take it from me, the angst isn't worth it.

Well said! Well said indeed. Thanks for updating, because I've been curious as to how that trade went. I'm also glad that you eventually came out ahead.

In the same vein, lemme tell you what happened to my last trade. Energy play in oil services. Basically, I was down by as much as $3000 for like... a good 2 months. I'd be lying if I said I didn't experience angst myself. Just recently, it recovered to the upside, and I ran out the door with a $600 profit.

Now, here's the kicker: It continued to climb, and had I stuck to my original game plan, it would have grown to $2000 profit right now.

So, where did I go wrong? First and foremost, I bought too high. Also, I may have wagered too much money on it, relative to the durability of my thesis. But all that pales in comparison to having my feelings get too tangled up in the trade itself. And because my feelings got in the way, it clouded my judgment just enough that I wanted to escape the angst rather than sticking to the game plan.

Now, I'm not implying anything about you here, slug. I'm just relating something that happened to me within the topic. But yeah, I screwwed up because I let my feelings get in the way. Suffice to say, I fully agree to either a) set an arbitrary stop of some kind b) find some way to disconnect so that I can continue to trade on a rational basis.

Funny. I've always known that, the moment you enter a trade, you need to have an exit strategy in place. In fact, I did have one. I just didn't see it through.

[Slug]

Yeah, I'll be curious to see if it keeps running. I really will be OK though if it does. It was just causing me too much grief to be worth it for me. If $10k were a drop in the bucket for me, that would make it much easier, but that's about 5% of my total portfolio bouncing up and down all over my stomach. I think I'm getting a better picture of my risk tolerance from this experience too.

[Slug]

Well, I guess today answers that question. My options dropped almost 50% in value today. Good thing I sold them yesterday! Now....do I buy them back?

[Slug]

I couldn't resist. I decided to see what was happening in the final hour of trading when the day traders would start to exit their long and short positions. It kept falling. So, the June Call option I sold for $5500 yesterday, I bought back today for $2250 right as the stock dipped below $550/shr which currently looks like good timing (unless Monday is another down day). This cost is basically equivalent to my profit on the first trade so even if I lose it all, I'll feel even. We'll see what happens next week after we get more consensus around whether these were good or bad earnings. I'm hoping the consensus is positive. I'm certainly comfortable owning the shares I currently hold.

[Slug]

Now I need an exit strategy :-)

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Huh, I just finished blogging about how I bought some Google stocks myself. 7%+ loss in market cap, when the financial sector is averaging more like 3% loss is just ridiculous.

I'm going to basically monitor next week, and see how the rest of Nasdaq's earnings report pans out. I do suspect that it GOOG will bounce back some, though I can't say for how much. Still, I don't need a huge win on this one. There's a reason why I placed my bet on this instead of PALM.

[Slug]

Huh, I just finished blogging about how I bought some Google stocks myself. 7%+ loss in market cap, when the financial sector is averaging more like 3% loss is just ridiculous.

I'm going to basically monitor next week, and see how the rest of Nasdaq's earnings report pans out. I do suspect that it GOOG will bounce back some, though I can't say for how much. Still, I don't need a huge win on this one. There's a reason why I placed my bet on this instead of PALM.

Looking good so far this week. I'm up about 12% ($280) on the option. I think I'll exit at 20%.

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GOOG's volatility is above the market's, but I am disappointed nonetheless that it ended up trending largely with the market overall. The stock itself didn't actually produce a bounce back, and a reasonable assumption (if you believe in such things) is that the current pricing is being viewed as fair market value. That introduces more danger into our position.

However, I still believe that, for this earning's quarter, tech is looking strong, and there may still be a good day or two worth of market or at least sector upside to hang in there. After that, and depending on how long the SEC/Goldman Sachs drama drags on, there may not be enough upside to sustain our gains. In fact, if we wait too long, we may end up with a loss instead.

I am also bullish about the outcome of the Goldman Sachs drama, but like Toyota, it could take weeks to months before the fear is shaken out. Of course, by then, the GS trade will be long gone, but I digress.

Even though we are not in financials, it's hard to ignore the impact it has on the overall market, and GOOG seems to be as vulnerable to it as any. That's how I viewed yesterday and today's trading actions anyway.

At this point, I see basically two ways to play this trade (and maybe only one for you). The first is to make this a short trade. Find an exit point some time this week. Don't wait until earnings season blows over and there are no more upsides to stay afloat. That or take the risks of being caught in the Goldman Sachs storm.

Or

Make a longer term fundamental play. Google has yet to release Chrome OS netbooks and tablets, but that may not be out until 2011. Still, I think that is bullish enough to make for at least a decent exit point. For what it's worth, even the most conservative 12 month target price estimate right now is at around $720, which suggests to me that Google still has upsides that has yet to be realized (like Chrome OS).

Because I'm holding stocks, I can go either way on this one. If it goes to the upside enough this week, I'll probably go ahead and cash out. If not, I'll just hang on to it and see what happens. All things being equal though, because the stock doesn't pay a dividend, I'm leaning towards the short trade.

Oh, by the way, did you see that huge after-market spike? (4:04pm, Apr 20th) Who ARE these people?

8:10am update: Apple is up by more than 5%, but oddly enough, Yahoo is down by 4% even though it beat analyst estimates. Today's overall futures market is trading on the upside so far, and GOOG is inching into the positive territory as well. Earnings results are mixed, but I think today may hold into the upside. If it does, I may sell today.

[Slug]

My options trade is certainly short-term. No way I have the capital to actually execute the option in June. I'm looking for a 20% gain, hopefully this week. I'll put in the order today.

I also have a long position (11 shares) that I might sell if the stock actually hits the analyst's target price one day...

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I've sold my position. Basically, my bet didn't pan out. But hey, at least I got away with a tiny bit of profit, and that's still miles better than taking a loss.

Now that I've sold it, watch as the stock proceeds to skyrocket for the next two weeks. It never fails.

[Slug]

Ha, you can buy back in today. I'm doubling down on the option. It worked last time.

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Hehe, yeah, I guess I could, but today's action doesn't seem to have changed in the sense that it does not appear to be running on any immediate upsides right now?

For a value buy, I was staring at Honda today (-2.24% right now), and for a bullish buy-out speculation, ARMH. The latter is interesting because, at the very least, it's a tech stock that actually pays a 1% dividend. P/E is through the roof though, but if there is ever a buy-out, then valuations won't matter.

Eh, I'm back to window shopping right now. Microsoft's quarterly earnings is happening as we speak, but unless it reports a massive blowout, I doubt much will happen there with that stock or techs in general. MSFT is at -0.96% right now.

So yeah, without stock or sector upsides, it's completely at the mercy of the market, and the market appears to be taking a break right now after a momentous run. So, I'm just going to wait and see. No need for me to be in a hurry to lose money.

[KTP]

I'd look at Exxon if it falls back below $68. I bought a ton at $66 (wishing I had bought more) and am happy that it is about to hit $70. Very little downside...even in the worst of the crash it did not go below $60, and I think $80 is not out of the question. Plus they pay a dividend

[Slug]

I'd look at Exxon if it falls back below $68. I bought a ton at $66 (wishing I had bought more) and am happy that it is about to hit $70. Very little downside...even in the worst of the crash it did not go below $60, and I think $80 is not out of the question. Plus they pay a dividend

Quit hijacking my GOOG debacle

I actually did pick up some Exxon around 68 a few months back. Got it set for dividend reinvestmant and will forget it for the next decade, unless another nice entry point opens.

[tripods68]

One word: NetFlix

NFLX: Basic Chart for Netflix, Inc. - Yahoo! Finance