Patience is a Virtue

Here is another classic example of how patience pays off. Sometimes as traders we get too distracted or super focused on the day to day activity, rather than looking at the bigger picture. PCAR was a case study from about 3 weeks ago that didn't start off as a huge mover, but was absolutely money in the context of the "trend trade" as it was intended.

Some might have exited this trade for lack of time available until expiration. This is another example of why I don't ever want traders buying options with one month or less expiry. What a shot in the foot to settle for such a horrible option. You can have the stock pegged, the market trend in your favor, etc but this option just sheds time value faster than it gains intrinsic. Please don't waste your time with these, unless you are a day trader...then again that trader wouldn't have traded this stock.

Take a look at that chart once more and zoom away from the daily candlesticks, and watch the wave-like movements as the stock trends higher. In context of this trend, every movement was normal and expected. The option selection process can generate emotion that effects your patience in this trade, so make sure you pick the right option for your strategy. If you have a trending stock, get some time, and a hobby to take your mind off of the day-to-day movements. If you have a swing trade, you can select a more aggressive option and fall back on a time stop.

Anyhow, after a little patience...congrats on the new 52-week high.

Recommendation: Choose your options wisely.

Long: PCAR

Short: Patience

Great case study on PCAR. I am one of the people who took the trade and then got out because it hadn't done anything for several days. I had two more opportunities to enter, but didn't take them. I have been reading the "Market Wizard" books. Several of the people interviewed said sometimes they have to reenter the trade to get it right. One even mentioned reentering 4 times. I don't think I have ever reentered a trade when my intial timing was off. I, of course, can see that it is emotion keeping me out. The chart tells me to buy. I am sure more success will come when I simply do what the chart says.

Thanks for the case study on PCAR. I bought 300 shares on 3/30 @ $73 thinking to add calls when the stock confirmed and to exit before earnings. I did not add and had doubts last week with earnings quickly approaching. I decided to sell 3 May covered calls and have not added to the position. My maximum gain is limited to $4.45 and I must hold to expiration or exit all trades. Patience and emotions are so hard to control, but at least I am making some money as I'm trying to become a better trader. On the pull back, I'll pull the trigger on buying some of those calls.

I got stopped out of PCAR on April 12 with a fairly small loss because I had my stop a few pennies above the fib retracement where it stopped that day. I learned a lesson. But, if I understand the Wash Sale rule correctly, had I gotten back in and taken another loss, the losses cancel each other out as far as the IRS is concerned. Would someone please comment on how they deal with the wash rule.

As Jeff mentioned, I need to get away from the day to day movement of the Market and give the stocks alot of room to retrace in order to get the big gains. --Patti

Last week I almost dumped my VLO for the same reason. Had to go home every night and say 10 "Plan the trade, trade the plan" 's. Paid off big today ;-) Hope it stays tomorrow

Thanks for the PCAR focus today. I was just telling Catherine this morning how grateful I was that we'd bought May options on PCAR a few weeks ago and we could afford to sit back and sip pina coladas while we waited for it to pop. Yesterday and today we were finally rewarded. Now we have to decide when to get out.

Bailed on DRYS today too. 210% gain and it looks like it's running out of steam for a while. I'll keep watching it though.

I have my own watch list to post tonight, but I have to get my girls up to the barn for riding lessons. Thank goodness for an awesome day on the market for us.

Chris and Catherine

PCAR anounces earnings tomorrow morning before the market opens. Why didn't anyone tell me? I'll sue!!!! Oh man. I'm hoping that the movement and volume of the last two days may be an indicator... but if it's anything else I'll be looking for a sword to fall on.

Always watch for earnings folks. Never, ever hold over earnings, folks.


Watch this space for early morning sobfest.... or victory dances.

Chris and Catherine

Jeff .. my thanks as well for PCAR ... I came out Friday .. not wanting to hold till today with earnings Tuesday ... It cost me 33% ... BUT, I made some Friday ... much smaller mind you but didn't lose and wasn't going to hold through earnings.PCAR is always on my watchlist because look at that history ... zig and then zag ...

Your blog is superb and I thank you for the time you spend on it. It's stuff like you did today that makes it worth my time to visit. You must have wrote that to me .. it's exactly my picture over the last few days with this stock.

Oh but there are so many more out there .. and I am looking to jump into some in the next 48 hours ...

Thanks again!


You know how i feel about earnings. It's perfectly okay to hold over them...that is, if you plan to do it.

Make sure you grab a WM on the way to work and you should be just fine.

I see IBM had an analyst upgrade today. Didn't seem to make much impact by the end of the day.
Nice tombstone candle if it confirms.
I'm still in...


I love PCAR! I've made money on this stock more than a few times because of it's consistency to pretty much stay in that nice upward moving channel. And this time instead of biting my fingernails every day waiting for it to hit it's target, I did get an extra hobby!!!

pasadena, ca

Thanks everyone for your comments on my failed SPX trade over the weekend and Jeff, for addressing it in the Marketcast on Fri. I have emailed Mike Coval with a couple of brief questions about that particular trade and will post his response here when I receive it. I'm going to leave the SPX trades alone for awhile especially since there are alternative indexes to trade.

Happy Trading,
Cinda (Santa Rosa)

PCAR is looking good today pre market, maybe we could hit the 84 target that the chart reads.

What do you guys and gals think?

David S

Man, it's tough to find time to do anything when you have two active kids. I promised my list of guaranteed winners... so here they are



These are guaranteed to work for you.... but only if you reverse my calls on them. Make the shorts long, and the longs short, and I'm pretty sure you'll come out a winner (as opposed to me, who is a weiner.) Ooops... that goes against the psychology of trading. What I meant to say is that all those stocks will perform as ordered. They can't possibly withstand the combined mental powers of Chris and Catherine. Actually, FRG is a very exciting stock as it's a Gold/Uranium combo platter. Two great plays in one stock!

PS... Catherine has had her Oija Board out and says that all the stars are lining up (actually it's the lines on the Market Forecast) and she's very concerned that everything's peaking together. She thinks we're in for a cataclysmic drop (well.... at least SOME kind of drop) and so we're shying away from any bull plays that are at the top of their cycles (ie DRYS... even PCAR in the last couple of days.) When Catherine speaks... the world listens (if they know what's good for them.)

Chris and Catherine

hey chris. looks like you're going to be happy with PCAR this morning.

I held Pacar over earnings with no regrets.

i held 1 may contract also over earnings,,,so now we have to decide where to take substantial profits. looks like chris and catherine will be dancing this morning.


Congratulations Chris!!!!

I stuck to my rule, sold yesterday for a profit before earnings, so I can't complain..but seeing PCAR up almost $11 today...OUCH. I would have tripled my total account balance!


Whoopee! Finally got something right! Held on to PCAR and took my $ and ran this morning! Will probably get back in this one after it pulls back from this exponential rise! What a day.

(a new poster, but avid reader)


Hey Keith, I'm there with you. I haven't worked earnings strategies into my rules yet so I had to stay true and get out yesterday. PCAR was still a great success story for me, even though it's tough to see the nearly 400% difference in profits that would have been today. But hey, we didn't know that yesterday.

Congrats to everyone who was able to hold. I'll get there one day. What a rush!

So tell me again why we never hold over earnings? I held my May options on PCAR. I interpreted yesterdays pop ahead of earnings as "somebody knows something".

Cha ching! Finally one to celebrate.


looks like plce is ready for another leg down

Congrats on PCAR!
I'll wait for the next pullback to get in.


___________Enter Dancing __________

We're in the money... we're in the money. Well, I think we were due for one of these "calamatous mistakes." I have to admit, though that it feels awfully good... and in hindsight, the two days before earnings were big increases on big volume and pretty much did portend good earnings. I make earnings announcement at noon, actually. As one of my favourite songs would say... Should I stay or should I go?

Meanwhile SPF, NNI, and HOV all have "cat barf" Phase I and IIs and are all doing what "cat barf" stocks should do.

Bailed out of IBM puts this morning. Whose idea of a joke is it to upgrade a stock that's trending down? To the moon, Alice. Sort of took a bit of a shine off the day, but it's hard to get too teary with the $5.50 PCAR calls we just sold for $19.00 (now if it was WalMart it would have been $19.99)

We'll have to face south and bow to the Options Gods tonight. Or buy a bottle of champagne, and toast our good fortune. That's two home runs this week. Time to sell everything and consult Catherine's Oija Board.

Chris and Catherine

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About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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