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Losers: 100% Loss On FSR And CGC Calls

May 22, 2021 2:33 PM ET
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  • Bought the FSR 21MAY21 17.50 calls on Mar 25 and Apr 9 for an average cost of $2.16.
  • Calls expired at Zero on May 21 - 6% portfolio allocation.
  • Bought the CGC 21MAY21 25 calls on Apr 9 and Apr 20 for an average cost of $3.39.
  • Calls expired at Zero on May 21 - 6% portfolio allocation.

Both these trades are painful examples of how long a position can move against you - and when you buy a call, time is your enemy. 

Initially bought the FSR calls on Mar 25 on what appeared a the beginning of a bullish reversal - but the shares failed to follow through over the next two days and dipped below the lows of the entry day price bar - another attempted rally occured on Mar 30 and the shares did touch the $18.00 level on Apr 1, but then it was all downhill from there.

I should have exited the trade on Apr 6 and moved on - but instead I added to the position on Apr 9, thinking that the shares would hold at the 200MA - they didn't - instead, they dropped for six consecutive days, essentially wiping out the trade. 

On Apr 21 BAC upgrade the stock with a $30 target price - and the shares rallied 17% to close at $14.00 - it looked like a bullish breakout was about to happen - but the very next day, GS downgraded the stock with a $10.00 target price, and that was the end of the rally. 

When trading, you have to know when to be stubborn, and when not to be stubborn - with this trade I should not have been stubborn. 

Initially bought the CGC calls on Apr 9 as the stock appeared to have found buying suppor at the $28.00 level - but the next day the shares dipped below $28.00, and then churned sideways for the next five trading days, but still hugging the $28.00 - on Apr 20 the shares dropped 6% to the 200MA - I should have closed out the trade here. 

Instead, I added to the position, thinking that the 200MA would hold - it did and the shares managed to rally back up to the $28.00 level by Apr 28 - I should have closed out the position here at breakeven but decided to wait and see if the stock could break above the 20MA - it didn't. 

From Apr 28 the shares slowly dripped lower for 12 consecutive trading days - wiping out the trade. 

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