One last drag, and then I’ll quit

I’m not a cigarette smoker, but I must be smoking something. I announce the suspension of discretionary trading (on a temporary basis), and all I do is discretionary trades. My latest transgression is a quick 3-day trade. I’m in, I’m out. Small profit.

Here’s the play. We’re all gonna die because of yet another natural disaster. This time it a pig flu or something. Whatever. SARS, bird flu, warming, cooling, pandemic over here and polar bears dying over there. I know when I’m being played.

So the latest trade is to buy drug companies (read: the hero of the fable) that will save us from the latest nefarious villain to assault the good people of Planet Earth. Alright, I think I’ve seen this episode before. If not, it looks very familiar. Hmmmm. Anyways, what comes up on the recommended buy screen is NVAX, a drug company, presumably. What do they do? Not sure. And neither do the herd buying this, pardon the expression, pig. A stock stuck in the doldrums of pennydom all of sudden is the hot pick of the day. Well, I see volatility spike to 257% in JUN and the 5 call is selling for $0.75. Okay, I’ll sell that. I’m taking on unlimited risk to make a measly few cents, but I’ve already disclosed I’m smoking something that is probably not good for me.

The trade goes my way on day one, up $0.40. Day two it goes against me as the stock rallies into the close, but still up net $0.20. Day three comes and this flu scare still has legs. The government is talking about spending (big surprise there) some serious money to control this problem.

Now I’m getting nervous. What does NVRX do again? Quick Google search reveals they’re working on a vaccine. Uh-oh. It’s time to bail. Put in a bid to buy back my short call for $0.35. Market moves my way in the morning and I’m happily filled. Net profit of $0.40.

Now I’m back to suspending discretionary trading on a temporary basis. At least until the next time. And I’m not counting the FAS/FAZ anti-pair covered call trade, which I still have on. It’s complicated, okay.


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