Why I Stick To The Rules!

What's up folks!  It's Friday!  Another week of crime fighting behind me.  I'm hoping to recharge (Yea right!) and get ready for another challenging week ahead.  So, lets talk about what happened to my BIDU 97.5/102.5 spread this week.  At the beginning of the week BIDU was trading right about $84.00.  Our spread was in great shape!  Tuesday was cool and then Wednesday came and things started to get interesting.  During a morning break at work I checked my phone and saw BIDU had jumped about $5 or right around 6%!  I was like what in the world is going on!  There was no great BIDU news.  It appeared the market in general was reacting to news from the Fed. 

When I researching my trade for the month I was tempted to pick a lower strike in order to grab some extra premium.  But then I thought......stick to the trading rules!  The rules are there for my own protection.  In trading sometimes you're biggest enemy is yourself!  So I'm glad to say I resisted that temptation and picked a strike with a much higher probability of success.  So instead of having to decide whether or not to exit a losing trade or roll my spread to the following month I rolled with the punches like a good boxer and survived.  In after hours trading tonight BIDU is still around the $90 mark so I still have a good cushion in place with one week left to go until expiration Friday. 

So what's the moral of the story?  Stick to the rules that made you successful!  Even if it means you make a little less money in the trade.  Make no mistake, trading options is a big boy game.  It's much better to make a little than lose a lot!  Have a good week guys!

 

Whew!  I'm glad that one missed!