Turning a Big Loss into a Small Loss | Options Trading
Protecting yourself against the downside is an important sill as a trader. You never know when a position is going to move against you and you never know when your timing is just plain wrong.
A few days ago, I made a post about the SPY puts that I bought. That turned out to be a horribly timed trade and the position almost instantly moved against me by about 30%.
I lowered my average cost of entry by purchasing the same puts on the following day, but the trade continued to move further and further against me. At this point, I was about 40% in the hole.
Today I purchased another contract to lower my average cost even further. Then the position recovered slightly in my favor and I decided to sell it for a small loss. I ended up with a total loss of about $10 per contract (-7.2%).
Considering that the trade was at one point almost halved in value, I think this is an acceptable loss. The original timing of the trade couldn't have been more off.
Here Are My Trading Logs:
- Contracts were bought at an average over $138 per contract (bought an equal # of contracts 3 times over a period of 3 days)
- All the contracts were sold at $128 (a $10 loss per contract or about -7.2%)
Win Some, Lose Some. Just Don't Lose it All
You win some and you lose some. As long as you can come back to the table tomorrow, I consider it a lesson learned and just another day of trading.
According to the Bible, Why is there death if there is God? (Part 1 of 3)
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I'm glad you are writing about this stuff. I have never been a trader. I have lost on every try lol. I do want to understand the concepts though. It is important for me to grasp it if only for my crypto trades. I don't want to stay in steem forever without some type of exit plan.
Way to trade around it and minimize that loss. I thought about putting on a put position this afternoon but did not....it would already be against me, this market is crazy.
It is part of the game to remain calm and hit the big win in the next move.
I do what I can to not loose it all!
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Loses are part of the game, as long as your avg. win is greater than your avg. loss and that ratio is great than your winning %, that's all that matters.
Keep those post coming, nice to see how you view the Markets.
Wich platform or app are you using?
If its possible to place a stoploss i reccomend placing them!
But we all make mistakes as long as you learn from it you'll be better off then not learning from it! :)
Sorry to hear this trade went against you. Buying puts and calls is tricky, your income averaging makes sense mathematically, if there’s enough time for your initial assumption to be right.
Good luck and happy trading.