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Safely Generating Income in Retirement

Archive for November, 2010

MYGN – Final Results

Posted by mounddweller on November 27, 2010

All,

It’s been quite a while since I’ve posted anything on my blog.  My apologies.  However, no posts doesn’t mean I haven’t been trading.  It just means my trading has drifted away from exclusively following and selecting only VISIONS trades.  More about that later. 

Right now I want to update you on the final results of my MYGN trade.  You’ll recall I entered this trade with a buy/write back on March 29th.  Shortly after that a court case went against MYGN that invalidated some of their patents.  This caused the stock to drop substantially.   After MYGN went nowhere for 6 months I decided to sell calls below my break-even price.  Of course Murphy’s Law came into play a few short weeks later and the stock jumped back up above my $17.50 strike price.   It then stayed there and closed ITM at the November expiration.  Rather than trying to buy the option back and roll it out, I decided to let it be called away at a loss.  This was my first loss ever using Ron’s VISION’s methodology.

Below is a snapshot of my MYGN trade:

Let’s spend a minute evaluating what I could have done differently to prevent this loss.  First, better due-diligence upfront before placing the trade may have revealed the potential patent issues.  Second, I could have been more aggressive in my trading after the stock fell.  I only sold one round of puts.  Had I continued to sell puts instead of the calls, I more than likely would still have MYGN in my account and would continue to lower my net cost basis.

Regards,

Troy

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