Friday afternoon I decided to cover my short position in SPF (SPF) at $11.70. I decided to cover the trade for two reasons–one subjective and one more objective. First, my subjective reason for covering the trade is because I will be away from the desk for the next week and will be unable to keep track of the markets. After suffering from being away from the desk a few weeks ago, I am not about to repeat that mistake.
Second, and more importantly, Friday afternoon’s dip gave me the opportunity to get out from under water and cover with an insignificant overall loss for the trade. Although my last two trades in SPF have been decently well executed, my initial position was taken at the worst possible moment, and as a result it became very difficult to average up enough to make a profit.
Therefore, I felt the optimum move here was to cover and wipe the slate clean, which allows me to wait for a better entry point. No harm done, and I’ve managed to extricate myself from a bad situation quite well on the whole.