Good Evening Marvin:
I have to admit that I let my emotions get the best of me. When I was first considering selling the October calls (yes, I am bullish on AOL, but didn't think that it would catapult to far and so fast, taking into account all of the "concerns" with regards to lack of broadband strategy, free ISP, Microsoft etc... AND THE MONTH OF OCTOBER! I thought that it would be a safe bet going for the 120's when it was at 103 with less then 3 weeks away. In the past I have almost always seen AOL trade down by options expiration right next to the sweet spot on a specific options value multiple (85, 90, etc...). After watching it close at 120 (or 118, depending upon whose closing number you wish to believe) and open real strong this morning, I thought that AOL would finish options expiration at a highould er level. I weakened and bought back 30 (out of 50)of my contracts at 6 (ouch) when I sold them up at an average cost of $1.50, but also sold the October 130's at 1 5/8 right after buying back the october 12O's.
Could have been worse. AOL could have remained stagnant at 80-90 level. I also made money selling calls back in august and september. With the earnings coming out shortly after options expiration and the holiday season comming, I didn't want to commit myself to a November strike price, not just yet.
I did find it amazing that AOL dropped like a rock during the last 3 minutes of trading frm 122 to 118.5 with the options gonig from 5.5 to 3.5. I guess it's all a matter of timing (and a little/lot of luck).
Best wishes,
David |
