RCI - Lessons in Top Ticking

07NOV07 - I bought (1) JAN $50 call for $5.50 on RCI based on Option Addict heads up. This has worked sometimes and sometimes not. I think when it doesn't is because I hurry to enter and languish to leave. I applied a swing trading technique incorrectly. It appears I bought on the confirmation of the close above the recent high and I got in the next morning when I saw the price was up again. This entered me right at the tippy top tick but I didn't know that yet but should have seen the warning signs that day because it closed forming a dark cloud cover. Plus I was buying near the top acceleration band and it broke below the upper boundary of the Williams %R that day too. The next day was a high wave day which is another sign of possible bearish activity and indecision.

09NOV07 - I switched it into a short call calendar by selling the DEC $50s for $1.10 with no margin required. In hindsight, I could have sold the $45 call for $5.10 and covered my ass better but would have taken up some margin which I may have not had at the time.

14NOV07 - The price has clearly broken diagonal support and is tanking. I bought back the short $50 for $0.05 and rolled to the $45 calls on 19NOV07 for a $2.40 credit. It worked out pretty quickly but was still causing a loss to the original long call.

19NOV07 - A little rally, probably short covering, popped my out of my short $45 call for a $75 profit and I held my long only to see it gap way lower the next day on huge volume. Ugh.

13DEC07 - I continued to hold and hope with my option way out of the money and decaying. I told myself to finally sell at $0.20 and ended up selling it for $0.10.

Lessons Learned/Rules Broken:
1. Watch for better entries near support or resistance. Don't buy when the price is so over extended.
2. Plan your exit. Instead of setting a stop at the break of a pivot low or a trendline, I sold calls and locked in losses but not selling the right strike. I believed I was right and that it would come back. It didn't.
3. Look at the past but trade the hard right edge.