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CERN has really good fundamentals, a nice price pattern over the last 2 months, recently closed over it’s 7 day avg after dipping down to it’s 30 day avg. If I were on the ball I would have bought this one this morning, but i was having trouble with my trading software (user error!).
Here’s what I see:
CERN
Underlying: $60.80
Support: $56.50
Risk: $4.30
Sept 65 Call Option
Ask: $2.50
Delta: .57
Option Risk $4.30x.57 = $2.45
Acct Value:$2825.00
Risk = 10%
Since my account value is so small right now for a trading account, this is an acceptible risk for me. Ideally the risk is kept at 1-2%. For smaller accounts $10,000 or less, 5% is acceptable. For $3k, I’m OK with risking 10%…after all, this is my original money from nearly 2 years ago that I am still trading (infrequently).
So I just placed the order, and it was filled at $2.35
Now I’m going fishing!
Suzanne @ July 15, 2009
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Ouch. Last week’s sudden market drop stopped me out on both my GOOG and NFLX options, even though I’d set my stop loss 3% below what I predicted to be the support. This week both are back up, but I need to remember to keep my emotions out of trading, so I will press onward. I should not have been in GOOG anyway, for reasons I mentioned in my last post. So Despite really wanting to have another go round, I am going to wait until it is in my budget. Although if it hadn’t stopped out, I’d have made a bundle of cash by today.
Suzanne @ July 15, 2009
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Google has been on my watch list since I started looking for good trades again. It’s got a lot of great healthy signs and yesterday closed over its 7 day moving average after touching down to it’s 30 day MA. It’s still trending upwards, the company has good fundamentals and shows a healthy trading pattern.
I’m breaking my own rules a bit with the risk involved in terms of the percentage of my account to risk with any one trade, but my trading account is really small right now, so my risks will be a bit bigger than I like. I’ve justified this by telling myself I’m going to be depositing more money into my trading account soon, so my ‘real’ risk is a little lower.
Here are the details of this option:
GOOG (Google) underlying $418
Support $402 (Recent Low)
Risk $16
Option: Sept 09 Call 430 Strike @ 16.10 Delta .44
Option Risk: $7
Acct Value: $~4000
Risk Percentage = 17% (OUCH!! Don’t do this at home kids! That’s just for one contract $7×100)
I probably shouldn’t even be playing in google at all with this account size, but hey, what can I say. I’m in a slightly better financial position now than 2 years ago when I started. Even though my trading account size is small, if I lost it all, I have some cash in savings that is set aside for investing and investing education so that’s my justification.
Resistance $448 (Recent high)
Suzanne @ June 26, 2009
