Sell half the remaining BG calls to lock in another 15%... This will leave us with 1/4th of our original position... and lower our risk exposure as the markets continue their volatility shake-out... and the subprime lenders reap the rewards of their reckless past. (To say nothing of their really unfortunate lendees, who are facing foreclosures... bankruptcy... psychological damage and all the rest...)
The remaining 1/4th of the position we will let ride...
So this means we'll have locked in 14% on half the position... 15% on 1/4 of the position... and we will see what happens with the rest.
Not bad for one week's work... and we could see a nice spike from here... In fact, I'm confident we will.
But again, when you can take double-digits off the table in this kind of market, with stocks falling again today... we'll do it. This is the key... finding the "efficient frontier" where your risk/reward behaviors are perfectly balanced and taylored to the market... We'll go with the flow and take profits where we can.
ACTION: Sell half the remaining BGDP.X position at $2.70 or better. We got in at $2.35... and the options are trading at $2.70 today, up 4.65% on the day... Meaning we're locking in 14.89% by selling at $2.70.
Good day,
James
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