A very experienced trader who shall remain nameless made a rookie mistake yesterday. This individual put on an option trade by way of rolling forward a long trade from a well in the money strike price to something at the money in order to lock in gains and reduce risk. Basically, the plan was to sell out of a 60 strike call and buy a 70 strike call. That’s not what they did, though.
Nope. Instead, they bought a 70 strike put because they failed to pay close attention in both the order entry process and to the confirmation screen before the order went through. The error was not spotted until going through the confirmation emails later in the day to enter the trades in to Quicken. Now they have to reverse things and will probably take a small loss in doing so.
Therefore, today’s lesson is: PAY ATTENTION!!
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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
** See John’s full bio.
