Yesterday I closed out my diagonal call spread on PM for a very modest profit of $351.99, a 13% return on my capital at risk, and an IRR of 583%.
In hindsight, I should have allowed for more upside, and used a ratio spread where I bought more long term calls than I sold (similar to my WMT and KMB spreads). PM had declined substantially to around $46, a price I thought was unreasonably low. Ultimately, given the negative market sentiment when I opened the position I chose to protect my downside more and hope for a flat market. PM instead rose to the high $49s in a short time period. I'll continue to monitor the stock and look to enter into a similar position in the event of market weakness.
No comments:
Post a Comment