I closed my position in ConocoPhillips (COP, $37.98, down $0.02) today. We got some bad news this morning that effected the momentum of the oil stocks as crude supplies climbed unexpectedly by 700,000 barrels. Analysts were expecting a drop of 1 million barrels. As a result, oil fell $3.38 to settle at $42.33 a barrel and ConocoPhillips started slipping once the news hit the Street.
Selling pressure intensified after the larger-than-expected inventory build but I was able to close the March 40 calls (COPCH, $0.60, down $0.15) for a profit. I bought 10 contracts on Monday at 58 cents and they traded as high as 99 cents today. Had I sold at the high, I was looking at a $410 profit. My target was a $1.00 so I should have sold at 95 cents or so but the calls were sold for 80 cents and I made $220. My stop was raised to 75 cents and I knew it was going to be hit so I got out early. Yes, I left some on the table but I’m only trying to hit “singles” in this market. The homerun trades will come.
If I had held on to the position, I would have lost money and that is what I’m trying to point out. Look, if you can make $150 a day trading, then that averages out to $750/ week, or $3,000 a month.
By going into a trade with set targets on entry and exit points and with using stops, you take all of the emotion out of the trade.
Having said that, the sell-off in oil intesified and many traders are starting to believe that OPEC may not cut production when it meets this weekend.
I also said to protect your profits with the Exxon Mobile (XOM, $65.77, down $1.62) trade. We had an 80% profit on the April 70 calls (XOMDN, $1.65, down $0.70) going into today’s session and the call options were profiled last Thursday (3/5) at $1.25. They traded as high as $2.40 which was inches away from a 100% return. Oil, ConocoPhillips and Exxon could rebound but there will always be other trades.