Yesterday, I opened a few positions in the 3x financial bulls etf symbol "FAS" as I though it was at a better value than technology. To my surprise, the banks exploded higher in making a new daily high. With this new high, I believe the financial banks will begin to perform better and attempt to reach all time highs. I bought the January 18th long call option strike 28 for 1.49$. I believe the XLF stock will reach 30$ and I should be able to sell this option for (.51/1.49)=34.2% gain. I will be interested in locking in some profits with a sell call when the stock is near all time highs. I bought 7 contracts, so I am risking 1,043$ and looking to make atleast 250$ up to 340$.
Comment:
this was interesting trade where you can say that I got lucky. I put this trade on September 19th, and the stock jumped up on September 20th. I usually hold trades for typically a week, but something in my gut told me to sell my options. I sold all 7 contracts for 1,085$ which is a profit of (1,085-1,043) = 42$ for 1 day. This is an example of buying the "breakout" and the stock pops for 2 days and then just dies afterward. I've seen these scenario's many times so maybe that's the reason behind my "gut feeling". I don't feel bad about closing trades because there will always be opportunities.