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August 23, 2012 / redman59

Yes, I Was Long BIDU Into Today

Working night shift from 6pm-6am at times has me missing the first hour or so of trading.  In most cases it is not a big deal as I don’t have over-leveraged positions.  I mostly trade options in which the whole position doesn’t compromise more than 5% of my account.  Last night I replied in Rhino’s post that I had put on long positions (via credit spreads) in IBM and BIDU.  Well you can probably guess where I’m going with this.

Today I woke up around 11:30EST, rolled over and looked at my brokerage app on my phone.  What was a nice performing position in BIDU yesterday as I went long on that mornings dip, now looked horrendous.  My first thoughts as emotions overcame my reasons for entry were “I hate those fucking Chinese stocks, why the hell did I get into this thing?”  At the time it was trading down something like -5%, what the hell could have been the news?  I went to my desk and then the first thing I saw was that it was seeking legal action against QIHU and it was downgraded by an analyst from Deutsche Bank.  If you’ve read my posts/replies in the past you know that I categorize child molesters/rapists/thieves of personal belongings all the same; well analysts are the next people to throw in there.  I believe they are some of the biggest manipulating & useless people within finance. 

So my position in where I was up around 9% at EOD yesterday is trading around -30% and things did not get better.  The stock continued to sell off until around 1pm EST.  Did I panic and sell my position?  No, although typically I would as it was around a -40% loss on the option spread and represented around a 2% loss on my account alone.  Either way BIDU demonstrated that those types of losses can occur but usually I am out way before then as seeing my stock down near 5% is a signal that the trade is not working. 

Moving on, my game plan was now to wait and enter into a long position for the swing.  To me the news that caused this drop caused seemed extreme and watching the dollar volume, it was hitting panic levels.  Also I turned to my volatility chart and we were showing extreme readings.  I entered the trade when it was trading down over -8% in which it ended up trading as low as -10%.  One of my favorite trades is fading the analyst downgrade and I felt that this was a bit much so when I believed that the stock should retrace the selling I entered into a next week 110 call option with BIDU trading at 112.84. 

So what did I do next?  I went for a run.  Yes this may sound stupid but it was the afternoon, I needed to clear my thoughts now and I would return at 3:15pm EST.  Also with the added position I was still okay with the loss if we saw more selling through the day.  I have found removing myself from the trade in these situations is best as I often have the tendency to overwatch it and not let it work.  I returned and saw that the position was up 5%, not bad considering where it was before.  Then I thought that this could be a really nice trade if it kept going….stupid thought, don’t ever think like that.  So I remembered how I wanted out of this trade, my adjustment worked, and I cashed out returning a little over 2% on the whole trade, so basically nothing for my account besides mitigating a bigger loss.  Either way I will be able to go into tomorrow not caring where BIDU is at.

I plan on making this trade visual via charts and showing my thought process when I get home on my computer as I didn’t have time EOD and have no access right now.

**Side Note**
If you are an outdoors type I suggest the Google MyTracks app as I have found it to be great.  Below is the data taken from my run, consisting of interval runs.  It downloads the info to their Documents spreadsheet and plots it on a map.  I like to use it for running, hiking, and kayaking.  Also not a big runner so keep your jokes to yourself….please.

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