RWS,
I'm basically in agreement with a lot of what you say. This is simply a little educational experiment, trying to find the best tool in this sector to work to maximize gains with 1) as little capital as possible and 2) good risk managment.
You bring up an important issue which I have brought up many times--the use of stops--often to no positive response. The PTEN recommendation was specifically made without any sort of a buy stop, sell stop, trailing stop idea, no real discipline on buying the position (buy if it trades above $XX by XX:XX a.m., etc.)--it is clearly a don't-worry-be-happy buy at the open and sell at $36 . . . no matter how long that may take, no matter where the stock may go to along the way. It is vital, as those who have ridden big gainers down to small gainer, flat positions, or losers, to have in place an exit plan. Options by their nature have this kind of loss protection built in.
Btw, when I updated last time I failed to update corrrectly on the PTEN trade, it was up about $1980 and still fully at risk whereas KWK hit-n-run is up $2098 and now sitting in cash.
My next move in KWK will depend on the market. A nice rally from here could provide an oppo to buy puts. A fall from here, if not overdone (so as to change trend) would indicate calls. As of right now it's rising but in an area that recommends neither to me. I think my next purchase will be June options, we're getting a little too close to expiry to be using May now. I will, as I did on the last trade, be setting aside some of this campaign account in cash before expanding in size. I may also discover a different name in the energy sector to trade. Flexibility in my reactions to what the Market gives me are my two objectives.
Finally, I will note that the 4-day 108% return was made via calls, that is, the long side, of energy. I chose KWK because it is still a bullish stock in technical terms and that is not the case for PTEN right now, and definitely not the case for many other names often mentioned here: BRY ATPG RIG DO VLO.
Kb |
