Yesterday, when we captured a 50% gain on our put options in Akamai Technologies (Nasdaq: AKAM), we also placed a stop-loss to preserve capital on our Lowe’s call options.
This morning, those stop-loss orders were triggered.
The option opened at $0.63, below our $0.80 stop-loss, handing us a 65% loss in our official portfolio. However, in the same opening minute, several orders were filled at $0.80, so most of you likely received a better exit price than us.
Either way, a loss is a loss, and it’s unfortunate this uptrend didn’t pan out.
I’m glad, though, that we were at least able to place a stop-loss to preserve the rest of our capital. This is something we’ll aim to do whenever we have a position that’s underwater at the end of its prime holding period. I don’t anticipate this happening much — but I’m a firm believer in limiting losses whenever it’s prudent.
So we’ll stick to that tactic, and our overall profit-taking strategy, which continues to hand us a win rate of more than 60%.
As for the open portfolio, that leaves us with three positions.
We still hold the second half of the Akamai Technologies put option and are riding that for higher gains. But we’ll keep the stop in place to secure a 10% gain on the remaining half in the event the option pulls back. It’s currently hovering around the 50% profit mark. Of course, if that climbs, we’ll raise the stop to ensure higher gains.
Our Garmin (Nasdaq: GRMN) July $52.50 call options and the Monster Beverage (Nasdaq: MNST) June $45 call options are both in the red at the moment. But we have several weeks before we will look to exit either of these positions, so there is plenty of time for the drifts to kick in and send our options higher. Let’s just be patient.
With that said, that’s all for today. Unless a new trade comes up, or we need to take action on our open positions, I’ll be back next week with a portfolio update.
In the meantime, you can reach out to me with any questions or feedback at firstname.lastname@example.org. I can use this quiet trading period to address anything you might be wondering about the system or the portfolio.
Chad Shoop, CMT
Editor, Earnings Drift Alert