I've finally liquidated my COF shorts. The bid/ask was 0.25/0.35 and I placed a limit order at 0.30. It was executed immediately. This leads me to believe we'll be heading much lower today because of the market's eagerness to take my puts.
There are two reasons for dumping these puts. First, is that the August expiry is this Friday. The time decay this week has been brutal. A new rule for options trading is that close any long options before the last 8 days or so til expiry. From then, the time decay really accelerates.
Secondly, we gapped lower today at the market, but there is no follow through to the weakness at all. In fact, the market is making a logarithmic rise and holding above 985 on the S&P by 10:30am. The TICK has also crossed +800 multiple times; whereas the lowest we've got so far in the TICK is -728.
With the support for COF at \$34.00, there is very little I have to gain when the market overall is holding above 985 and seem to be going higher as of now. So I've decided to dump this position.
I purchased these puts at 2.20 about two weeks ago. Total loss. \$380 + \$15 = \$395. This is yet another trade that got away from me. I am now going to limit my trading until I can find my edge again.
One mistake I've been making is neglecting the market environment. For one, we've been in a bull market until proven otherwise (probably not anymore since last Friday). Second, the market has been very choppy and trading in a range this month. These are factors that I need to consider in my future trades.
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