Cenovus Energy (CVE.TO) tested 27.50 support and then bounced back to break the short-term downtrend line above 28.50 or so, see Figure 1. Naturally, I don't want to turn a profitable trade into a losing one. So I wanted to sell my puts options on CVE.TO while I can still exit at near breakeven. However, as I am new to Questrade and unfamiliar with their interface, I made the careless mistake of buying six more contracts instead of selling the six that I have!
[caption id="" align="aligncenter" width="570" caption="Cenovus Energy (CVE.TO)"][/caption] I realized my mistake soon afterward from checking my account. Imagine my surprise to find that I am an owner of 12 puts contracts on CVE.TO. So I wanted to cut my losses immediately. Unfortunately, the energy sector (XLF) and crude oil just broke above some key resistances and CVE.TO bumped up a few more points. The right thing to do is to ignore my unfortunate losses and just exit the position, as that was what I intended to do. But I didn't. I decided to not panic and analyze the stock yet another time. CVE.TO is definitely weak. It is lagging behind others in the sector. Other energy companies are breaking above resistance levels but CVE.TO is still below its 29.50 resistance. Yet, the fact is that the trend in the sector is upward. Which is very bad for me. I am still holding this short CVE.TO position over the weekend as it hasn't broken my 29.50 mental stop yet. I can give my bearish reasons here upon observing the tape this afternoon (e.g. Goldman Sachs Canada is dumping shares), but they would just be excuses under the current circumstances. In any case, this is an embarrassing confession as I've violated one of the most basic rules of trading. This position is near breakeven on paper as of the close. But who knows what can happen over the weekend. Rather than risking 3%, which is already too much, I am now risking a maximum of 10% on this trade. What have I done... The high commission in trading options is affecting my decision. If this were a forex position, I would have dumped it all without giving it a second thought. This is a sign for me to stop trading options altogether. It is better to stay with a long-only equity strategy in my RRSP than get eaten up by commissions or take excessive risks as I am doing now.