Closed CSCO Position

My CSCO position started with a mistake.  While getting used to the platform after switching my account to IB I mistakenly sold calls instead of a put, as if I hadn’t made hundreds of trades for years and didn’t know what I was doing.  I didn’t panic.  Instead of closing out the short calls on a stock would go higher I sold in the money puts at a strike $2 higher than the calls.  This gave me a cushion to make a $200 profit if CSCO stayed between $23.00-25.00 through expiration. 

CSCO made a steady climb since I added my second leg, but in a reasonable enough fashion that I knew I could manage my position easily enough.  I thought about closing it last week to pocket $100 profit and move on, but thought I had a good chance to make it to expiration without having to close it early.  That’s about the time CSCO started a strong rally.  Today it went up more than $1.00 and I decided that I missed my chance for a profit and had to cut my losses while they were small.  While CSCO was trading at $26.02 I bought to close three CSCO March 25 naked puts at $0.12 and paid $38.14 with commissions.  I thought about stopping with that one trade and leaving the upside exposure since CSCO will likely come off its current high somewhat before staging a stronger rally.  Then I thought better.  Take the loss, don’t be emotional about it and move on.  CSCO had dropped a penny by the time I decided to exit in full and I bought to close three CSCO March 23 naked calls at $3.05 and paid $917.14 with commissions.

I took in $258.86 from selling the calls and $543.86 from selling the puts originally.  After paying out a combined total of $955.28 today I ended with a realized loss of $152.56 for my mistake.  Making the mistake at the beginning wasn’t too irritating to me compared to not closing the position when I had a profit in the hopes of making less than $100 if I waited.  I would’ve waited even longer, but CSCO says they have a huge announcement to make tomorrow and I don’t want to be in the way of the herd if the markets don’t end up selling on the news after today’s big run up.

The bright side of this is that I freed up some more cash to use on other new positions.  This morning I entered a limit order for a UCO calendar put spread, but it hasn’t hit yet.  I’m trying to work an April/October 12 strike spread.  I’ll detail it if/when the order is filled.