Learning And Recovering From A Priceline Stock Trade Disaster – Investor Questions

Priceline Stock (PCLN) reports its next earnings on November 6 2017. This is a highly volatile stock, particularly around earnings. I trade it during earnings periods and results have been stellar, but trades I construct have a high degree of protection and I limit the amount of capital I am risking.

I recently received an email from an investor who discussed selling put options against Priceline stock before the earnings were announced on August 8 2017. His initial repair effort failed and he suffered a large loss in the aftermath. In his email he wonders about recovering his loss and what he might try differently to keep profiting from his Priceline stock, Put Selling strategy.

Let’s review Christopher’s questions and then look at some answers:

Investor Questions:

Hey Teddi,

i am Christopher, 25 years old from Austria, i think I need a little help.

I am trading options since 2013, most of the time i am selling puts on dividend stocks i like to own, since this year I am playing a little bit with earnings strategies. However I sold put spread on Priceline (PCLN) before earnings in August. It went terribly wrong. I rolled the put spread down and away, but the stock didn’t recover. Tomorrow would have been the expiration date, i closed the contract yesterday with a total loss of 5200 dollars.

I wanted to roll a second time, but the strikes of the puts have to be more wide to get enough premium to cover the loss. I don’t want to make the strikes as wide as needed, because i don’t want to risk so much capital, only to see another loss if the stock tanks.

Does it make sense to wait until the 10 period SMA (simple moving average) flattens out or starts to rise again and than place my order for the bull put spread to lower my loss? What would you recommend?

I am a huge fan of yours. I love your strategy site. Don’t know anyone who describes better the art of investing.

Please keep up the really great work here!

Best regards   Christopher

Some Answers:

Christopher made a number of mistakes which he can learn from. As well, since the loss has already been generated, Christopher now needs to focus on recovering the lost capital.

Sometimes An Immediate Recovery Is Essential To Rebuilding Investor Confidence

For many investors losses like those taken by Christopher can destroy their confidence. Many times when an investor takes a loss, his confidence is shattered and he quits equity investing altogether.

Such events are common and that is indeed sad, since there are literally dozens of ways to repair and recover from a trade loss, which can restore confidence and quickly regain growth in a portfolio.

Let’s see what we can learn from Christopher’s mistakes and some ways to recover the losses he has taken.

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 Investor Questions – Learning And Recovering From A Priceline Stock Trade Disaster

Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.