Today, we’re going to protect one of our positions.
Our March 3 $79 call options on Western Digital Corporation (Nasdaq: WDC) are down about 74% right now — nearing our 75% loss threshold.
At $76.35, Western Digital’s shares are relatively close to our $79 strike price, but they have weakened. We got in this position on January 26 with the expectation of holding it for a month to capture the earnings drift. Since we don’t have long to see it kick in (our expiration is up in about two weeks), I want to protect our position now.
So let’s set a stop-loss order to limit our losses to 75%.
Before placing the following stop-loss, you may have to close your standing limit orders to sell half the position for a 50% gain. It will depend on your broker.
Also, be sure to set your stop-loss order at whatever nets you a 75% loss based on your individual entry price. Our official entry price is $3.18, so our official 75% stop-loss order will be set at $0.79.
Here’s your action to take:
|Action to Take|
|Sell Action to Take|
|Stock:||Western Digital Corporation (WDC)|
|Option Type:||Call Option|
|Order Type:||GTC (Good ‘Til Canceled)|
|Trade Deadline:||Keep this order open until it is filled or canceled.|
That’s all for now. But please let me know your thoughts about the trading process. I want to continue fitting this service to your needs, so if you have any feedback, please write me at firstname.lastname@example.org.
And remember to keep an eye out for new buys. I have some companies on my radar that might meet our trading parameters. If they don’t, however, you’ll hear from me next week.
Until next time, good trading…
Editor, Earnings Drift Alert