Paper Profits
It’s hard. Today is one of those days where, the US markets gave a positive lead and Australian market just did not care! Oh well, according to the day’s news, it’s all got to do with China this time, banking loan performance is sluggish, suggesting that growth will stall too. So, as I was out of the house having playtime with my toddler, I actually did not know why that was happening, didn’t have time to check the news, I thought it was just the customary Friday slowdown, so I stalled around doing some shopping for my new “healthy options” food and routine (yeah always a good excuse!). So back at home and finding that news about China, I was thinking that US could take that badly, and add a long weekend (for Memorial Day 28th of May), there could be heavy selling on their Friday (Saturday here), and could lead to falls the following business day here in Asia (on Monday).
These are the possible scenarios :
1. The US Market will move down on account of the China news and long weekend, which will lead to Australian market falling. This is beneficial for my short position the STOTO7 Covered Call which is now at 34c value and can still fall in value making more profits for the position. “Letting profits run” … fingers crossed!
2. If Australian market, having digested the news on China does not fall, then, I can get a potential confirmation that the move down on the short term is reversing and can be a good point to take profits. My Target was to buyback at .38cent, making 30cents profit or 3 times my initial Risk or 3R.
3. I can take profit today, secure in my knowledge that I have profited already buying back at the price of 34cents ( already reaching my 3R target)
I am of course trying to do the “trader’s way” and letting profits run, leaving my paper profits alone till the time is right!
On another hand, I am thinking to take another transaction to protect the stock or not, and I decided I will wait for the price to move (market to indicate the direction) because the prices seems already depressed at this point and after the long-weekend selling, a bounce can miraculously happen! I have been conservative on previous trades and seeing objectives are being met, I am calculating, looking for a better risk-reward ratio for my next position, even if it is a protective one.
So, overall today, I am taking a non-action action!
(Saturday update – US Market down, and it’s not even about China! LOL)
STOTO7 as of 24 May
