Monday, October 2, 2017

The Week of September 24th

I have wanted to start something like this for a while now. The reason I haven't lies in the fact that I didn't have enough money to start actively investing. I have a tiny portfolio, but I wanted something that I would be able to write about every week. Meaning that I would change something, or come up with a new idea, or make a trade that would actually be worthwhile writing about. If we are being very honest, I don't know what to do with my current portfolio. I bought these things without doing the necessary research, or basically any relevant research. It's down. I have been having an internal battle with myself as to whether I wait it out, or if I bite the bullet and just completely burn the portfolio.

Maybe I'm not nearly as smart as I like to think and I would continue to make these bad decisions. In summary, there has been very little movement in my portfolio and writing about it week in and week out would be a snooze fest. But now. NOW. I have finally been approved to buy calls.

I figured now would be as good a time as ever to get something started. I made a few moves this week and want to write it out. Personally, I am very interested in how people make their money. I want you to understand that this isn't my main source of income. I'm sure you all think you're smarter than me. I bet a lot of you are. But here I am and here you are. So I'll take it for what it is. Curiosity.

Monday the 25th
On Monday I bought my first call. I had been looking into buying opportunities during the week prior and settled on Best Buy. Ticker BBY. The reasoning behind this was because in the last week of August it gapped down on good earnings but bad projections. From the low, it climbed quickly up to the resistance created by the gap and then gapped lower again September 18th. My thinking was that it was going to have a similar reaction because the news that caused it to drop was irrelevant. In my opinion at least. There were a couple news headlines that mentioned the battle against Amazon being pointless. They threw around the Toys 'R' Us story about going bankrupt after teaming up with them. The day after the second big drop there was a small candle indicating the bears and the bulls were battling for control over the situation. The third day was the kicker for me. The very strong white candlestick showed that the bulls had won the battle and created a morning star pattern (bullish) in the process. Another day of very little movement gave me concern; the hammer after the move upwards could have predicted a quick reversal. That was Friday the 22nd. The big risk I took was the buy on Monday with no clear sign of a continued increase in price. You could call it intuition, I call it luck, but after the buy Monday and a small increase Tuesday I had already broken even and could have made a small profit. I was feeling good.

Wednesday the 27th
Then Wednesday happened. The stock jumped up about 2.50% and my long call position skyrocketed. My position quickly jumped from $420 to about $510 giving me roughly a $100 dollar gain. Just at 20%. I was watching it closely the whole day having a war with myself as to whether I should sell now or not. The option was long term - didn't expire until April 2018 so I had time. Did I believe they would break the gap resistance? I don't know. At any rate, 4:00pm rolled around and I held onto it.

Thursday the 28th
Thursday started off jittery. I had had too much coffee in the morning and was nervous about a down day and losing everything I had just gained. Luckily for me that did not happen. The 28th opened lower than the close the day before, but slowly it crept up to the close of the previous day and then past it. Only between 10 and 40 cents, but that was enough to bring my position to a 26.6% gain and bring me to a decision. Time to sell. I pulled the trigger and crystallized my profits to what came out to a 23.6% gain on my initial investment. Happy birthday to me!

Friday the 29th
I was feelin' good. Had my birthday dinner and drinks plan in place and was looking forward to the weekend. It was a slow day at work and it gave me time to start doing research into my next investment. I made sure to remind myself that this won't just keep happening and not to get my hopes up too high. My morning was spent on the finviz stock screener trying to figure out what to screen for to find a good buy. Instead of putting the work in on a new equity, I attacked the list I have running through my head. In the end, I decided on AMD and INFY. If I could go back I probably wouldn't have bought INFY. The disparity between the bid and the ask was around 40%. So I was already down once I bought it. Friday turned out to be a good day and I made back half of the difference, so things are starting off well.
That's something really important to think about and be conscious of when buying options or just stocks. If the spread between the bid and the ask is too large then it makes it that much harder to turn a profit. Likely means the same type of spread will exist once you THINK you're ready to sell. I realized that too late.

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