jay_beckner

I play poker and trade options, seeking edges from study, reflection and analytics.

#023 BIDU Calls Day Loss

If you are viewing on mobile, scroll down for links to adjacent posts and email subscription options for /trades and /blog. Thanks for visiting.

Opening Trade Details: Bought to open 2 Jun 16th Baidu Inc (NASDAQ:BIDU) 177.5 calls for $2.59, $524.03 total cost (90.6% of account), 3 days to go. The trade executed at 10:31:13 when the stock was approximately $178.65.

Potential: Baidu stock has been consistently trading through harmonic patterns. Another bearish bat pattern was (and could still be) forming on the 15-minute chart, to complete at ~$185 by Friday. I wouldn't look to hold this position through week's end, but these options could triple.

Thesis: Purely technical as stated above. I entered the trade when point C (on the chart below) held, and BIDU started toward point D.

Potential bearish bat pattern on the BIDU 15-min chart.

Potential bearish bat pattern on the BIDU 15-min chart.

Closing Trade Details: Sold to close whole position for $1.99, $391.94 total proceeds. My market order executed at 11:00:54 when the harmonic pattern failed and the stock fell through $177.47 (point A).

Return: (25.2%) after commissions

Bearish bat pattern breaking down forcing me to sell the position.

Bearish bat pattern breaking down forcing me to sell the position.

Note: I shouldn't be trading this short term without full visibility into market pricing -- to enter and exit this position, I used a stop/limit and a market order respectively. (If you haven't been following along, optionshouse doesn't give real-time data to accounts under $1,000.)

However, given the recent trade in BIDU and the potential stated above, the risk/reward was compelling. Thinking a move ahead, a subsequent swing short at $185, after capturing the upward move, could have catapulted me to some level of (account value) viability.

Status: $446.24 account value, ($478.50) YTD loss

#024 BIDU Puts

#022 BIDU Puts Closed Profit