Sometimes It’s Best To Walk Away
- Posted by DynamicHedge
- on April 26th, 2011
A couple weeks back, I wrote about one of my all-time favorite spreads that had “blown up.” Some people looked at the chart and said, “buying opportunity.” I said, “knock yourself out.”
I’ve seen a few of these blow-ups. Once they move this far, they’ve trapped way too many people to let anyone up for air. This spread needs time before I will trade it again, otherwise the trade will just look better, and better, and better until I have no more money in my account.
This is opportunity to someone, and I’m not totally discounting the fact that it may come back. It’s a matter of time-frame and opportunity cost. I will continue to stand aside until my algos tell me otherwise.
Here’s the chart from the original post:
Here’s the chart from today… notice that after a brief retracement it is now trading $5+ lower. UGLY.
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DynamicHedge is an equities, futures and derivatives trader based on the West Coast. He runs a long/short opportunistic relative-value strategy within a proprietary trading group. More
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