Trade Report

Stock / Symbol: [private_monthly]S&P 500 Index / SPX [/private_monthly]
[private_monthly] Option Strategy: bull put spread
Price at trade entry: 1273.15

Realized Loss: ($940)

Report: The position was exercised on Saturday for the full loss on the trade.

Analysis: Hindsight is always 20/20. It's clear now that it would have been best to take our lumps earlier in the trade and close the position once the S&P crossed under 1230 on Thursday. What we faced last week was the 5th worst week in the market in the last 10 years. This past week's market decline was only worse in other weeks following the 9/11 terrorist attack and the collapse of Lehman Brothers and Bear Stearns. We didn't know it at the time but it now seems likely that some on Wall Street were trading with the knowledge that Standard and Poor's was going to issue a US debt downgrade come Friday evening.

Mistakes, lost opportunities, and unforeseen and dramatic events are unfortunately inevitable... that's why we only risk 5 to 10% of our portfolio on any single trade.

------

Stock / Symbol: [private_monthly]Priceline.com / PCLN[/private_monthly]
Option Strategy: butterfly put spread
Price at trade entry: $519.53
Price at trade exit: $527.81

Max Risk: $920
Realized Gain: $80 or 8.70% (pre-commission)

Reasoning: With PCLN closing above $125 by market close on Friday, we were able to let the position expire worthless for the full 8.7% yield on the trade.
[/private_monthly]

Non-members, click here for access