This week, as most weeks do, seemed to exemplify everything that is crazy and wrong with the stock market.
Wednesday morning I saw a headline about stocks to watch at the opening. One was, in my opinion, my dreaded Netflix stock. There was news that the hotel market was opening up to the Netflix service, stock holders approved a stock split and the stock was hitting a 52 week high.
Some of this news, like the new hotel market, could move a stock into bullish territory, But not cause for pure insanity.
When I looked at it after the opening bell, it was making a strong move out of the gates. Having just had a very successful run of playing weekly calls with AMBA, I thru caution to the wind and bought not one, but two call options at 6.70 each. That was less than half an hour before I had to head into a meeting. I checked right before I went in and I was already up a couple hundred dollars. Cool!
An hour later, after my meeting was over, my $1340 investment was worth over $3600!
So, I sold one of my options that I had just bought figuring that alone was enough to give me a profit even if the other ended up expiring worthless.
Later that day, I saw NFLX was drifting down with no real support in sight. By the end of the day it was back down exactly where it had started and my one remaining call option was actually in the red by about $100. So, I decided to count my blessings and sold it.
Now, if you are keeping count, that is three trades, technically four but since the first two counted as one transaction, it really was three.
Well, low and behold, I soon received a polite email from my broker warning me about high frequency trading. The real clause in my terms of agreement is three day trades within one weeks time, which did not apply, but non the less I received a polite email reminding me of this and highlighting both the conditions of my account and the necessary links to apply for a day trading account.
Sorry to say, I was taken aback just a bit by this. I really had mixed emotions. On the one hand, “I’m not a day trader”. That is something I never wanted to be or do. Let me rephrase that “I’M NOT A DAY TRADER !!!” Yet there I was, doing exactly that.
But I can’t ignore earning $1800 an hour. Actually $3600, depending on how you count.
And yet, I have to admire my broker for being diligent and doing his/her job. And probably not leaving an opportunity to make some money off of me just in case I wanted to become a day trader.
Which I don’t.
But it was fun.
And I could have lost all my money just as easily.
Which is another thing I promised never to do.
I think I need to shed this day trader option fiend label and stick to regular positions for a while.