WMT 10/2016 Look Back Trade

WMT – 10/7/2016

This was a bull call spread I placed on WMT. This was a debit spread meaning I had to pay out to get it. My hope was that WMT would continue up. This was an add on trade to reduce some losses I had taken on a WMT covered call position I was holding.

My original WMT position was at a loss but I thought it was about to jump up after an earlier gap down. I felt WMT was under priced and I was hoping to make money on this trade to reduce my covered call positions losses faster.

I had the right idea, but I missed the bottom prediction. WMT went down 2 more days before it corrected up. This trade ended up a loser for two reasons. One was I got in too soon, did not wait for a clear signal that the bottom had been reached. The other problem is I did not purchase options with enough time left on them. Either of these would have helped with this trade. I had to close when I did to sell what little time value I had left on the calls. I entered the trade at $68.81 and closed it 11 days later at $68.55.

My initial risk was $820.00, I ended up taking a $380.00 loss on the trade. 46% loss is you are keeping score.

Date

Sym

Action

Exp

Strike

Price

Cont

Type

Cost

Balance

10/07/16

WMT

STO

OCT16

$70.50

$0.25

10

Put

$250.00

$250.00

10/07/16

WMT

BTO

OCT16

$68.50

-$1.07

10

Put

-$1,070.00

-$820.00

10/18/16

WMT

BTC

OCT16

$70.50

-$0.03

10

Put

-$30.00

-$850.00

10/18/16

WMT

STC

OCT16

$68.50

$0.47

10

Put

$470.00

-$380.00

Loss:

$380.00

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