Missed Opportunity (Lesson Learned) – SBUX May $16 Put

This was a missed opportunity that hurts. As previously posted (Bought to Open SQXQQ @ .17), I Bought to Open the SBUX May $16 Put as a hedge against a short term price decline. Although it served original purpose, I recognized a profit opportunity but failed to act.
After entering the position for $0.17 the Put rallied in price to a high around $0.59. I knew I should take advantage and sell, but I failed to pull the trigger. I then missed a second opportunity at around $0.39 per contract.

Now, the position served its purpose and hind-sight is 20-20, but I failed for several reasons.

1. Recognized the opportunity but failed to act. Greed!
2. Repeated #1 above. Pride.
3. Mismanaged the trade. Really, I lost track of the expiration date. Embarassing as it is, but I really though I had another week. Rookie!

I would be lying if I said I wasn’t disappointed, but in the end I must acknowledge that I played the position the way I intended when I entered it. It was to protect against the bottom falling out on the underlying if Starbuck’s dissapointed after already warning.

In the end, I played the position as intended, but failed to take advantage of a recognized profit opportunity. Had I established a sell rule for the option, I would have pulled the trigger. As it is I only had two exit strategies… exercise or expiration.

The financial impact was minimal, but the lesson was significant. I now have to set a better derivative exit strategy to include a sell rule. I cannot just hold the option and let it either expire or be exercised.

Related posts:

1. SBUX Rallies Shares of Starbucks rallied today as Nelson Peltz’s Trian Partners...
2. Sold TRA @ 49.47 I was stopped out of the Terra Industries (TRA) position at...
3. Missed Opportunities Well, I’ve been reviewing my watchlist today (and some inverse...
4. Reload Step back, breathe, relax. The recent market instability is a...
5. Bought DDM @ $70.67 Wow, it was a brutal day on Wall Street. The...