Today I found myself in a dilemma – whether to cage my instincts or not. I realized, there is no point in getting fully domesticated, in any part of your life. A bit of that wild, unpredictable side keeps it interesting.
I noticed one of my stock holding was down today – Shopify. It was down because of this short report from Citron Research group. For those who do not know about Citron, lets just say when they release their report (which is usually bearish), the stock gets hammered. Citron has made its reputation in this area, and they have been good!
I was trying to stay out of the options, by using stocks. It has been a while since I last made a profitable option trade. Perhaps that pain still remains. I was faced with a combination of three choices: sell my Shopify stocks (which I did for a profit of 5-6%), buy Put options, or do nothing. I decided to sell my Shopify for a small profit of 5-6% and buy Put options.
I bought the Put Options for the strike price of $100 expiring on Oct 20 2017. I bought it for $2.57 (after commissions), and ended up selling on the same day for $3.10. In the end, the whole Shopify holding returned a decent 14% in about 3-4 months. Now, this is what I would have yielded if Shopify did not have a price correction from its peak of $150. In fact, my profit percentage would have been around 20%+.
In the end, I could have held the put options for more days and profited more. However, I was content with the overall return of 14% with Shopify. Also, I do not like to hold options over night, the premiums get juiced, the time value decreases, and the risk simply increases especially when the expiration is in about two weeks.