I $#@%$$# UP my trade.

[crayon851]

So, due to my stupidity and impulsive personality, I moved to quickly to close a trade. I miscalculated my actual return and ended up closing the trade at much less than it was worth.

I entered the 103/104 Call debit spread Nov 28 Alibaba.
Initially I calculated a 70% return. Boy was I wrong.

Due to my stupidity and lack of attention to detail...and also my sorely lacking math skills (probably just overlooked it for a post), I thought the following.

Initial entry and expectation:

103/104 call debit for $36.

Max profit: 100- 36 = $64
Max ROC: 175%.
Closed position: 50.00 thinking that 63.00 was the max value of the spread at the time less the debit (again), so I figured 20% within max spread value, not bad. I was double counting the debit. Foolish me.

Actual return: $13 (approx 35%)

Boy was I wrong.

Actual spread value: 1.00
believed spread value: $63
closed spread at: $50.

So ultimately, although a successful trade, I double counted the debit and screwed it up.
I Should have been able close for at least a range of 65 to 80.

The importance of math guys...guys...guys

 

[FXforex]

Taking into account the bid/ask the value of the 103/104 call spread is closer to $0.50 (the price you got) than the theoretical value of $1.00, and it would have remained at about $0.50 right up to expiration. If you had tried to get a better price there would have been a high probability of your order sitting unfilled until you modified the order to the bid/ask quotes.

Long story short ......... You exited at the maximum you would have gotten.

 

[crayon851]

you

Taking into account the bid/ask the value of the 103/104 call spread is closer to $0.50 (the price you got) than the theoretical value of $1.00, and it would have remained at about $0.50 right up to expiration. If you had tried to get a better price there would have been a high probability of your order sitting unfilled until you modified the order to the bid/ask quotes.

Long story short ......... You exited at the maximum you would have gotten.

well if theoretical value was 1.00 at this time, im sure i couldve got maybe 65/70 which is double the return % no?

 

[ExperiencedJoe]

If you attach so much importance to a single trade, then you are gambling. In that case it wouldn't matter how much you make, in the end it will be lost. It makes no difference if you have lost it because you haven't maximised the profit in this particular trade. You are no worst off for it.