A Good Defense Is Your Best Offense
Sometimes the best thing you
can do is make sure you ‘live to see another day’
by taking what they give you, and not waiting for
what you had ‘hoped’ for initially. Personally speaking, I was bullish coming in today.
It’s true that by Sunday morning I wasn’t alone–but my thoughts on the market
coming in were based on the charts, and put out on our site via the
Intermediate-Term Report, well before the world embraced the capture of
Saddam via their favorite news anchor.
I had an existing Call position in the Semiconductors
(
SMH |
Quote |
Chart |
News |
PowerRating), which had been established on last Wednesday’s
technical reversal. Coming in today, the calls were already a ‘freebie’, as half
the position had been scaled out of for twice the initial cost. Nice, huh??
Something like that you could ride all the way to 5 points profit if we retested
the prior highs–but then again, you could also ride your existing buck and
change, ‘the real value’ in the ‘here and now’, right back down to zero, and
have a very ugly ‘freebie’ on your hands…if you aren’t disciplined in
maintaining the profits.
When I have an opportunity to be proactive, I do
my best to seize it. Sometimes, our best still isn’t good enough, but usually
our action of taking risk management into our own hands does have a
tendency to keep what’s rightfully ours much better than the other
alternative–even if it ain’t what we ‘hoped’ it would ultimately turn in to.
It’s true that I couldn’t lose any physical dollars after taking partial
profits, but in my eyes the very real opportunity cost, especially given today’s
very ‘trumpeted’ gap open, was more than enough reason to continue with a very
hands-on approach to something that some would say was already ‘as good as it
gets’, by having on the ‘freebie.’
As hope sprang eternal this morning, and the
futures were glowing an effervescent green in the premarket….I got busy with the judicious act of putting half the position out at levels that looked
like technical resistance in the SMH. My offer of 2 in the Dec 40 Calls was
right on as the high of the day was 41.89…unfortunately, the opening bar was
also the highs of the session, so by the time the options opened up for trade
(usually a minute or two behind the physical opening of the proxy), the SMH was
lower, and my call offer was effectively ‘away’ from the market….leading to
some disappointment, but more importantly–a reason to re-evaluate and keep the
profits in my own pocket as best as possible, within my methodology.
It definitely wasn’t easy–at least in my corner of the universe–as I ended
up using a break of the 30-minute lows to take off the first part, and then
ultimately the balance. No doubt though, I’m sure this trade would still receive
an ‘A’ for effort and due diligence by the man himself, Kevin Haggerty, but more
importantly, by keeping to a well-developed plan of execution, I was able to
maintain a nice profit, and be in a stronger position mentally and physically,
to look for the next high probability trade…and judging by the subsequent price action, ‘things did get a little bit better’, by sticking to the game plan of proper money management.