Sep 20 2008

What a sell to close stock stop order does

Published by at 12:46 am under General

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%).

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