DecWk3 - Cut Loss!

Last night's market performance by the SPY was indeed a uncertain one. It dipped further, and it hit my 4 times of premium sold criterion and I decided there and then to cut loss for peace of mind. :)

ROI for my loss is -18.12%. Ouch!

It amazing how once you have cut loss, you feel much much happier. I felt that last night. I know this week's trade is a little tricky just simply based on the way the premiums shot up and downwards. It's a sign that there is something special that is going to happen for this week's trade. I am not entirely sure what though.

In any case, I can enjoy my Christmas celebrations and I don't have to worry about/or whether if I will be assigned come Friday because of sudden gaps upwards or downwards. :)

As Warren Buffett once said, "I don't trade what I don't know". I think that's good advice, and especially if the market movements are so erratic, I won't want anything silly to happen and destroy my Christmas moods. :)

I woke up this morning, and guess what? The SPY after dipping and triggering my cut loss criterion, has gracefully increased and went up $0.83 to close at $145.12. Upon hindsight, it kind of matches my earlier prediction that it might burst the $147 trend line. I was looking at selling the $147/148 spread earlier this week.

So did I cut loss for nothing? *LOL* Well I try not to second guess my cut loss criterion. I put it in place for a reason, and if it triggers it, then so be it. I will cut loss, because the last thing I want is to worry about some kind of massive gap down on Friday market opening. Which could possibly happen since the candlesticks for the last 4 trading days have been rather long. :)

Looking at the SPY futures now, it looks like the SPY is gonna gap down at least $2.5+ which means it would probably trigger my strike price for the Put Spread $141.5/142.5!! Oh My Gosh. I can't imagine the horror of that happening tonight at market opening when my trade get assigned or if the buyer decides to exercise the option and I have to buy it back! I would probably incur a huge loss. :( 

This just solidifies my trading methodology and my firm belief that if you sense something amiss, cut loss and then come back another day. There are 51 weeks left to trade. :) 

Blessed Christmas people, see you next week. :)