Thursday, February 16, 2006

CLF Lesson

CLF is down 8 points this morning after a disappointing earnings announcement.

The lesson here is simple: last night we had to make a decision to cover our 90/85 CLF put spread. We did, while leaving some long puts on the table "just in case it disappoints". So, we gave back $100 per spread in order to avoid a potential $500 loss. Today is that day of "avoidance". Today is also that day when I can afford feeling smug having nailed the trade from both ends.

But most importantly, today is the day when this situation is still a lesson, but no longer a painful one.

I am glad I could share it with you.

Cheers,
/Dmitry

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