MUR & FTI Oil’s dissapoint
Looking at the charts retrospectively, it looks like I purchased these options right at the second shoulder of a double top! MUR has been doing a little bit better, but with the time decay of options, the option value itself is still a big loss. I should have set stop losses on both of these, but…how could I go wrong with oil?
With so little time left before expiration, I think I will just let these expire and count it as a lesson learned. Two major mistakes made in these trades, well three:
1) Never hold positions in the same industry in more than one position at a time (Diversify)
2) Never hold onto a losing option ( some might say set an absolute sell stop at a 50% loss of the original option value)
3) Never hold onto an option with less than 30 days to expiration (the time decay of options makes even viable options nearly worthless the closer they are to expiration…MUR case in point. The stock is rising, but the option I bought is still decaying.)
Suzanne @ December 15, 2007