I thought Itron (ITRI) was going to find some stability once the market righted itself, European worries eased and the risk trade came back on, but the reverse happened. ITRI fell hard with Goldman Sachs’ downgrade today. I saw it drop, but thought it could stabilize after the first 30 minutes. 20-25 minutes after that it only got worse, so I started dumping each leg I had into this trade. I started with buying back my covered call in case this was the bottom I wanted to start with what would hurt me on a rebound. While ITRI was trading at $52.40 I bought to close one ITRI January $60 covered call for $0.50 and paid $50.71 with commissions. This is the only current leg I made a profit on, but it was only a drop in the bucket for what I lost overall.
Instead of rebounding ITRI fell further. While ITRI was trading at $52.16 I bought to close one ITRI January $55 naked put for $4.40 and paid $440.71 with commissions. This two minute period marked the low for the day, but of course I didn’t know that and was just ready to exit the position in full and move my focus elsewhere. I sold my 100 ITRI shares for $52.30 each and received $5229.50 after commissions. While I’m writing this ITRI is back up to $53.22. I didn’t have to lose as much as I did, but if I had done the smart thing and dumped my position months ago I would’ve saved even more.
I ended up losing $1,964.74 on this series of trades that started back in March 2010. By exiting today I freed up almost $11,000 to use on other positions. Once I see how Friday’s jobs numbers look (I expect not too bad) and how the market reacts either way I’ll find something new to get into. I might just use another ETF since I’m still feeling the sting of a 5%+ drop in a single day just because GS decided they didn’t like the stock any more. The other option (no pun intended) I could’ve taken would’ve been to buy two February $60 puts to protect me from a deeper fall. If ITRI kept falling towards GS’ target of $45 then I could’ve sold those puts for a profit and kept working my position. I didn’t actually think of that possible route until now and doubt I would’ve done it, but it’s still worth mentioning for anyone else still holding on as a decent move perhaps.
The warning on ITRI came yesterday when it was down on a day most other stocks were up. That was probably the exodus from Goldman’s clients who got the heads up earlier than their non-clients. Or it was their own shorting based on the news they knew would push it down.
Yeah, a killer of a day for this stock. I held shares before the fall but no options. My basis is $57.50 so I’m considering selling $55 Calls and $50 Puts for January expiry. If I time that right and take in about $3.50 in premium, I’d end up with a $1 per share profit if it closes above $55, a $54 basis if it’s in the $50 – $55 range and a $52 basis if it closes below $50 (but double the shares). I made no move today but we’ll see what tomorrow brings.
Ronan, did you add options to your position? I can’t believe I got out at the low and it’s up more today. That’s just how it goes sometimes I guess.
I sold the Jan 55 Calls at $2.00 and will sell Puts on any drop. I’ll be happy enough regardless of whether I get assigned on either end of the trades.
Nice moves. You played it better than I did. I’m starting to think $50 might be a good floor. That’s what I had identified earlier as my floor, but gave up too quickly (or too late since I could’ve let my shares get called away at $60).
You never know though. The drop was overdone based on GS’s outlook but there’s nothing stopping them pushing it down further. January’s earnings release will tell alot.