Don’t Forget Your Limit Orders

These are the days that can really help out a portfolio in the longer run.  Just like in previous days where we got a big drop in a single day, fear takes off as stocks tank.  The VIX is up over 21 at the end of the trading day meaning those limit orders on naked puts we left out there from the past few weeks might be hitting.  I just checked my account to make sure everything was expiring as I planned and noticed an option I didn’t recall selling and then another.

Back on 9/20/07, I put in a limit order for CAT thinking that the price back then was too high and it would fall.  Fall it did.  While CAT was trading at $73.67 my old limit order hit and I sold one November 75 naked put (CATWO) in the money and received $314.25 after commissions.  Yesterday was the ex-dividend date for CAT which explains a little of the drop.  CAT is now below its 10, 20 and 50 day moving averages, but stopped falling when it hit one of the trend lines I drew a month ago, but it did drop through another.  This one will be interesting to watch, especially since my naked put is already in the money now.

Last week on 10/12/07, I put in a limit order for FCN thinking it needed to pull back some before I got in.  It worked today.  When FCN was trading at $53.90 I sold two December 50 naked puts nearly $4 out of the money and received $388.50 after commissions.  I can’t even remember where I found FCN now.  It was either Barron’s or Smart Money I think.  FCN came down to its 10 day moving average and is still above the trend line I previously identified.  If I’m right, it is close to the bottom and I’ve made good trade.  At least I still agree with this trade and would do it again.  Getting stuck on an old limit order at the wrong time can sting.  If you are not reading this post on www.mytradersjournal.com you are reading it from a site that has plagiarized it.  Please visit my site for original content and stop visiting this thief’s site.