trader’s journal

Position: UNP May 2008 $120.00 Put
Size: 15 percent*
Opened: 11/20/2007
Closed: 01/04/2008
Profit (Loss): 17%

trade thesis

The United States appeared to be headed for a recession, if not already in one, and container volumes at the ports of Long Beach and Los Angeles were declining year over year. Also, Union Pacific (UNP) appeared to be a poorly run railroad when compared to its peers, based on fundamental analysis.

mistakes, flashes of brilliance, and lessons learned

This was a successful trade and my first profitable one at Optionsxpress. A key mistake was committing far too much of my account equity to the position. However, in this particular trade it worked out because I was nervous and took a profit when it was available, in contrast to a similar trade in CSX.

In this particular case, UNP proceeded to rise from when I took the profit through expiration. Had the opposite ocurred and UNP dropped substantially, I would have missed out on a potentially substantial profit by closing the position too early because I was worried about the large size.

notes

* of total account equity.

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