TOL Bearish inclined naked calls - 19 Feb expiry

February's Secondary Trade

This trade is slightly riskier and is the opposite of the general market movement (bullish).

• Residential Construction as a category has done generally well through the pandemic, at this point most of the companies in this sector have a very similar chart movement (Downward range) which is great as it shows a level of predictability in price movement.
  
• Toll brothers is US's leading builder of luxury home. They have done well in the pandemic with their Q4 earnings breaking past estimates.
  
• For Q4 the company's home sales revenue was up 9% year over year with home building deliveries growing 10%. Despite the positive results price is currently ranging with no spikes.
  
• I'm positioning a neutral to bearish outlook as I expect the vaccination and the world getting used to the pandemic to see trading cash flow towards larger growth opportunities in COVID-19 impact sectors that are super beaten down and will see price climbing up
  

Sold 40 CALLs @ 0.6, Strike 49
BP block: 17k
Max gain est: $2374

交易手动结束:

Close this manually before expiry at a loss of 29,626. I should have closed this losing trade earlier but I kept going into that mental state of being hopeful that the price would go back especially with a RSI divergence. But I think at that mental state you read what you want to read and it's detrimental. This loss sets my fund back by 2 months. But it also made me realize some flaws in my system and mindset.

I felt so relieved when I closed this trade even though i booked a loss. I hate that feeling of hoping for something. The good news is this trade is somewhat hedged by my JETS trade which seems to be doing well. So that mitigates 1/3 of the loss