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