Down with Under Armour (UA) August 1, 2007
“Well. I followed my discretionary gut feeling and pounced on August put options this afternoon. I bought high this morning and lowered my cost basis this afternoon. Look for $1.15 to $1.50 in my trades. My target: $60 strike price.
Why? I am looking for the gap to fill after the earnings release. If the stock holds strong, I will roll them over to next month (if that’s the correct option terminology). The gap should fill; now I just need to nail the time frame and grab some profits. Maybe it won’t work but I tried.”
My Under Armour (UA) puts closed with a small profit but I played this position completely wrong. My cost basis was too high as the August 60 puts bottomed near $0.35 per contract. I jumped in too soon and didn’t allow the momentum to dry up before pouncing on the puts. They peaked above $5 yesterday around lunch but I doubt I would have had that maximum gain. The ideal trade would have been a cost basis down near $0.40 and a sell above $2.50 (this translates to a 500% gain).
“On another note, the AUG $140 puts for AAPL were trading at $2.55 last week and reached an intraday high of $13.40 today. It’s too bad I chickened out and never purchased them. I could have gotten out above $12 per contract for a 375% gain in one week. The Apple (AAPL) freaks scared me so I passed.”
Well, these Apple (AAPL) puts which expire tomorrow but end trading today are now above $22 per contract. The options peaked for an 800% gain yesterday (if I actually bought them). Following your gut can cost you. JUST TAKE THE TRADE CHRIS! Oh well, let’s move on.