Confessions of a Day Trader: My Martek Biosciences Call Option Misplay (MATK)

Dr. Ge Submits: No, I am not one of the shorts when it comes to Martek Biosciences Corp. (MATK). I am a faithful MATK long. But I got killed by it!

MATK 2-month chart ending June 16:

Talking about how volatile a short term stock option can be, my recently expired MATK June $25 Call option is an excellent example.

I bought the MATK June $25 Call option two weeks ago after the earnings report was released, at around $1.9. It went up to $2.5 shortly thereafter but I didn't sell it for a quick profit thinking it would go up even further. I set up a limited sell order at $4 untill the expiration day (Friday). Then we got the big market selloff and the MATK option went down to $1. During Thursday's big rally, MATK didn't do very well and the stock was held at around $26.6 for almost the entire afternoon. Since the option only had one day to live, I sold it at $1.6 for a small loss before yesterday's market close.

Well, MATK announced the big General Mill news at around 11:00 AM Friday and I saw the stock soaring above $29. If I hadn't changed my original sell order, or if MATK had announced the news one day earlier, I would have laughed to the bank with several thousand dollars!!!!!

I still hold MATK stock, so I am happy. But I would be even happier if I had hit that MATK June $25 call jackpot!