Post by Admin on May 3, 2015 13:27:34 GMT -5
(click to enlarge) Let me start by saying that this AAL trade was not a particularly well executed trade. Both the entry and exit were off mark and that was reflected in the results given that I was only able to make $640 on what should have been a $1500+ trade. Lets take a look at it:
A) AAL first showed up on my screen on April 24th when it tested the resistance near the 53.65-53.70 area on very weak volume. The weak volume run up into this area told me that there was no conviction on the buyers side of the book and that it would possibly roll over and trade lower.
B) There was another weak attempt top drive it up early on April 27th but that failed and the bears took control right there and then. I should have pulled the trigger right then but i hesitated because the bid x ask spreads on the Put Options were widening pretty quickly and I didn't want to pay too much premium to play this- especially since the IV was acting normally. Nevertheless, I stepped in an took the trade on April 28th when the buying volume disappeared. There were no real sellers at that point, but once the bids disappeared I knew it was just a matter of time before it rolled over.
C) On April 29th the sellers showed up and started disposing of shares in volume. At this point I was prepared to ride this trade to my target/exit and was very comfortable in the position. However, I started seeing some bids showing up and the selling volume easing up a bit and I got a bit concerned so I closed the trade. Shortly after closing it, the bids disappeared and the sellers came back and I missed a very nice flush move.
This is an example of a very good call and very poor execution. A little more patience and a closer look at the price action would have kept me in the trade and taken me to my target. But stuff like this happens in this line of work. Even after 15+ years of trading I still make silly execution mistakes from time to time.
