Hi ccrane, I don't mind putting the name out there of the TTR trade since the sell to close order has already come out and no one is going to make money off of Chris's recommendation now. It's difficult to comment on your idea to hold because I don't know what prices or when you got into the COG calls or turned it into a spread. I sounds like you did it all just yesterday which is a little scary. If you did, I'm sorry. The RSI was already in overbought territory and it would have been better to wait for the next opportunity. If I'm understanding you right, you want to hold onto both the long and the short call hoping that the call will become worthless (or just less) so you can buy it to close for a profit and then sell to close your long call. All I can say to it really is Chris gave the sell and you should follow it. Anything beyond that is your own speculation and risk. You're capped on your gains anyways because the short call will eat up any profits (or at least some) from its strike price upward that your long call would gain. If you wait for it to drop, your long call is losing, too, so you might as well close your positions. That's my advice.
I'm going to throw a little sidenote in here though just for "huh, look at that" value. In looking at the 3 year chart I noticed that every single time the RSI moved into OB territory and back out while the price was making a NEW HIGH, the stock price retraced to previous resistance, but when it only got close to OB but not through, it had an increased tendency to break back below previous resistance and return to previous support or near to it. SO, what I'm calling (depending on the next day or two's price movement relative to its new high) is a return to the $42 to $43 price level after which we'll see what it does. To be honest, I'm tempted if the price holds to a new resistance that it would be neat-o to buy a put and make money on the way down, but I'm just going to watch it. Reason being is, buying a put on a stock in one of the strongest sectors with strong relative strength is completely against the CRISS method. So I'll watch it and be amused if it does what I think or it'll do the opposite and I'll be glad I didn't act on it. The odds are against me in this one, or at least not stacked enough. I'll wait for the next opportunity...
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Dan,
I bought the Jan 30 call a few days after Chris suggested it and got a bargain at 11.80. Then, for once, I managed to sell the March 45 at the peak and got 4.70 for it. So, if the stock retraces as I expect after such a rapid rise, I may be able to buy it back for a buck or so and then I'll have about $8 in the trade and a chance to do it again.
What baffles me is where all my extrinsic value went in the Jan 30. When the stock was at almost 50, the options only when to $20 which would appear to be all intrinsic. I guess a delta of .93 means future increases in the stock price go 93% into the intrinsic, but that some of the growth to this point was at a lower delta and is hiding my time value. Just something funny I haven't ever gotten used to about LEAPS.
Thanks for your comments.
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