GLD – Milking My Rented Cow Day 4
GLD dropped this morning from 188 to 186.50. I sold a 188/186.50 put spread to accommodate this. The 188 put I bought back resulted in an $0.84 loss and a debit of $2.42 to cash flow, while the 186.50 put sold brought in new cash flow of $1.51.
Somehow - by mistake it is embarassing to admit - I sold a 188 / 186.50 call spread at the same time. I only realized that later, when GLD hit another level that set off an alert for me. Noticing that this was not part of my strategy, I closed the position, even thought it was likely to continue to profit as GLD continues to move down (I think). Since I would have counted this error in trading had it gone against me, I will also count it when it goes in my favor. We made a $0.36 profit on that reversal today. It contributed $0.36 to cash flow as well.
The Lesson? When you are trading with your own money on small positions like this, you don't pay enough attention. Be aware of that. This goes along with my general belief that it's important to put on fewer trades and positions rather than more, and pay a lot more attention.
At midday, GLD had dropped another $2.00. I rolled again, from 186.50 to 184.50. This caused a $1.46 loss on the 186.50 trade. It added $1.74 of new cash flow.
Summing up these trades, my p&l is now
$194 - $84 + $36 -$1.46 - $2.00 (commissions) = ($2)
My cash flow is
$185 + $151 + $36 + $174 = $546
Note: my outer calendar leg expiring AUG 28 has gained in extrinsic value, lessening my losses. Closing everythying out right now would lead to
an overall loss of $79. Still 2 days to go. The tide may yet turn in my favor, especially if I pay attention and avoid fat-finger trading errors.