TLT Time Decay Spread Look Back Trade

TLT – 7/7/2016

This is another of the 24 hour momentum trades. On 7/7 TLT was trading at $142.02 and I decided to place the trade based off of the hourly chart instead of using the daily like I would normally do. I thought it would be alright because I had resistance at the 7 and 21 day moving average and momentum was pointing toward a continuation down in the short term (24 hours). I also had a 52 week high at $143.82 which should provide resistance on the upside.

I bought the July week 2 $145 Call for $0.05 and sold the $143 Call for $0.29. I felt pretty good with the trade since everything expired the next day. However, when the market opened TLT shot up over $143.00 (my short) very quickly. Now I was in damage control mode, the problem is with these short term trades there is not much you can do short of taking your loss before it gets too bad. This is one of the reasons I do not trade many of these. I watched the trade all day, TLT dropped to $142.46 and I should have closed but because it was around lunch time on a Friday I felt it would stay around this range until close. It did not, when it hit $143.43 I decided to bite the bullet and take my loss. I had a chance to close with little or no loss earlier but now I did not want to risk losing more money. My total risk on this trade was $1,232.00 if TLT continued to $145. I doubted it would make it over the 52 week high of $143.82 but decided to close instead of taking the risk. I had already been proven wrong, no since letting it prove me even MORE wrong.

Date

Symb

Action

Exp

Strike

Price

Cont

Type

Cost

Balance

07/07/16

GOOG

BTO

7WK2

145

-$0.05

7

Call

-$35.00

-$35.00

07/07/16

GOOG

STO

7WK2

143

$0.29

7

Call

$203.00

$168.00

07/08/16

GOOG

BTC

7WK2

143

$0.42

7

Call

-$294.00

-$126.00

NOTE: My long $145 call was worthless. Not worth paying to commissions to try and close.

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