Trading Journal (06.03.20)

To those who follow and or read my blog I try often enough to post on my trading so that I can document my own progress in trading while also serve as notes to remind myself not to repeat the same mistakes. Here in this post is one of those mistakes.

Zoom

A Year to Date Chart

A Five Day Chart

Earnings was out yesterday after the closing bell and during the day the stock initially fail to hold above 200. Yet with a fail move in one direction there will be a stronger and opposite move which exactly is what happened with ZM. ZM ending Tuesday closing near record high and earnings was yet to come out. I made the mistake by going short via put and although I rarely play earnings I position myself to be short on a few items. One the stock has risen over 300% for the past three months and there were a lot of insiders selling in May. Furthermore the P/E based on daily stock price was equated to be around 2000x! That is correct, wall street expectation for the quarter was a earning of 0.10 cents, but the stock was trading at $200.

FOMO was strong and the earnings report came in better than expected. The initial reaction right after earnings were announce was positive news for price. Yet within minutes price fall back down to close to 200 from a high of 220. All this happened during after hours and at close of after hours 8pm est the stock held still around 204. That was slightly lower than the trading session close.

When trading open today the price gaped up and never looked back. The stock ended the day near 223. I closed out of my put at a -35% loss, but what was worse was my mindset of revenge trading and went on trading in spy puts, thinking markets had overshoot. Instead of following the trend which is up I went and shorted. SPY of course continue to rise and kept pretty steady up to 313 and closed at 312. It was 308 the day before, so clearly very bullish indeed.

Lessons learn, don't hold on too long to a trade if I I am playing counter trends, any profit I should have taken as that would have mitigated my losses. Remember a counter move if not strong can lead to a greater opposite move. In both the ZM put and SPY puts I had opportunity to limit my lose and at moments even come up profitable for a few dollars. Not ideal but should have taken it considering I was playing a counter trend and saw price supports held up.

The FOMO for stocks is alive and well. Boeing - BA where I had sold a few weeks back has now is riding high near $180. If the last month had taught me something it is to hold on to stocks a little longer than to sell cover calls which had the potential of taking away my shares. The entry I had at BA was around $129. I can not keep reminding myself of that but rather remember to play it differently next time.