BIDU picking the top

Its been a week since BIDU's crash back to near 400s. The initial drop in BIDU began three days after the gap up. There was an immediate gap down on day four and I scalp the trade for a small gain. (A very similar trend happened in AAPL, it was day four after its initial gap up did the stock go up. I find it very interesting.)


I was unable to capitalize on such simple move down on the stock because most of my capital was settled in, Goldman Sachs, GS options. I was on the wrong side of the GS trade and got whack pretty hard. I had 175 Feb10 calls at 5.10 and sold them for about 1.95. I also purchased call vertical spreads that total my lost to nearly $5,000.

I held the GS's calls until they reported their 4th quarter '09 earnings, and as trend was a tall tale sign, the stock dropped like a rock that day. (JPM and INTC both had positive earning reports for the 4th quarter, but their stocks dropped after the announcing their respective reports.) I closed all the calls I had on GS and turned bearish immediately.

My emotions took the best of me in the GS trade. I broke many rules that I tried to enforce. First was to control my lost, which I was unable to do because the day GS open to trade right after earnings the stock price fell within minutes. My asking prices had to be changed every few seconds but I was unable to catch any bids. Out of desperation to get out of the trade I went with market order. I should had set a trail stop on the trade to control my loses. This trade was just dread awful. Still I cannot dwell on the mistake, instead I must repeat to myself to learn from this and move on.

Another reason why I know it was a bad trade was because the day I purchased the GS calls I wanted to recoup loses I had in my GLD strangle spread. Arrogance got the best of me because my calls never got a positive gain after the day I purchased them. After my consecutive loses in YGE and GLD I should have walked away from trading for the week or at least control my amount of capital to trade so that I would not again, yes again, fall off a cliff. (Metaphorically speaking of my capital.) Foolish me.

Furthermore not only did I lose capital in hold the GS options I lost the opportunity to gain some impressive capital if I could have shorted BIDU. One mistake automatically leads to another. A chain of events that clearly were all hurting me.

There is a bright spot to this. I was able to flip bearish right as I left my GS options and used whatever capital I had to shorting the market and have recoup almost 2/3 of all my loses in the GS options. I also felt comfortable with my shorts when I executed them, which I did not have as much as when I purchased the GS options. I should take note of my comfort levels in certain trades. Until next time, G.L.T.A. in trading.

Mistake after mistake after mistake

I was hoping to start off the new year on a winning streak and at least end the year 2010 in the positive. In any case I went long GOOG options yesterday right before Google was to have their presentation to unveil the Nexus One. A couple of hours after I executed my trade I was already up over 15% but not expecting what would happen next I kept the options as the stock tumbled.


This is not my first trade of the year but I am posting it to remind myself how fortunate I was in this trade. What happened today was GOOG stock tumbling over $15. I had Jan10 630 call options and luckily I sold all of them right at today's open, which GOOG started off up $1. I did not even have the mentality to short GOOG after I exited the trade even though I knew full well the stock was breaking supports left and right. The reason for not shorting was because I was shell shock to have escape my call trade with a profit.

The technical indicators had the stock lower however I kept the call options overnight which was a major mistake. I knew the stock was getting weak but did not anticipate on a $15+ downward day for the stock on a otherwise subdued trading ranging for the overall indexes. Next time I will make sure not to flip back and forth between going short and long on GOOG and instead stick to my original plan. My original plan was to buy Puts which I did but sold one day after for a measly gain and went long on the same day. I had studied the pattern that GOOG's upward short term trend was slowing and anticipated on a drop, just timed it way off.

On a side note around 3pm I bought a NDX vertical put anticipating on accelerated drop in the NASDAQ due to major tech stocks such as AAPL, AMZN, RIMM, IBM, INTC, & GOOG all were looking to accelerate downward. That I am making a profit on and will probably close out the position tomorrow morning to avoid any positive push Friday's unemployment numbers may bring to the market.

Taking it one day at a time because there is nothing better to do than living in the present.