Okay expensive lesson learned today. My PCL Options (.pcljj) sky-rocketed from yesterdays purchase at 2.20 to close at 5.7. I placed a stop order to close at 5.5, and a limit sell of 6.5, selling off two thirds of the purchase. The option won’t come due for about thirty days and I expected and still expect the timber reit’s stock price will continue to climb, so I figured cash if it rises sharply and protect myself with the stop order at 5.5 and hold a third no matter what for expected monthly gains.
However opening price to day was 2.65, which triggered my sale. Ouch. Team Bush/Paulson, tauting economic stability, threw a curve ball by agreeing to purchase all illiquid assets held by the financial companies. Serious? We’ll help the economy by purchasing things that are worthless with your tax dollar? I suspect that was why the sudden decrease from closing price of PCL at 56 to current flat line at 51. Taking the price of my options with it. But its all an illusion. Financial stocks C, GS, MS, SNV are up today 24% to 18%.
Lessons learned. Capitalize when you can. Put a limit order when the value has doubled, as soon as you buy the stock. (One triggers other?) As for security? Stop limit orders should end at close of day.
Clearly I’m still learning things. Just as I see a philosophy, it gets turned. Yesterday they announced no fed rate cut, and my silver and commodities increased, contrary to what should have happened. Today they announce a huge spending of the American Tax dollar, which should push up silver, yet it only increased .5 points (5%).
So okay the US financials market is in turmoil. I’ve got my eye on a few things, and am trying to figure how to profit. For that I need to journal my wins, losses, and reasonings.
Feds announced yesterday that they will not be cutting the rates, which should restore some faith to the dollar. But that will take some time, silver and gold on the other hand increased 14 and 11 percent today while the rest of the market dropped. Makes sense, with all the news has stirred fears, making some cling to commodities. Though long term, should strengthen the dollar. How long a term is that? Twenty years?
In two days the options market will be active as all September options will expire then. That should mean there will be some movement. Can’t say I’ll know exactly up or down, but I’ll place some calls when the market opens, in my favorite timber reit, PCL. Also taking calls on DBA, a commodities futures fund.
The dow is down to 10,609, a small 4% from yesterday, well off from monday mornings open at 11,121. Sunday night you’ll recall a bailout deal fell apart for Lehman Brothers, creating panic and the downward spiral. Would have been great to see that coming.
Oddly the money gains I made this month were early in the month, calls on CitiGroup, and Puts in BUCY and EXM all of which had seen big hype over the past few months. Lost money on Puts in AIG placed on monday, and Puts in Joyg (trying to replicate my wins on BUCY.) Also lost on EQUINIX Puts, which had appeared to be dropping. It continued to, but unless there is a 4point drop between now and end tomorrow, the puts will be worthless. I cashed out when it lost over half the value.