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Why was NFLX down when the markets were up big Wednesday?  If you are trading trend channel support and trend channel resistance, you don’t need to ask that question. Monday and Tuesday our standout stock was NFLX – Netflix. But here is the catch, it is trading at trend channel resistance now and we would rather lock in gains which is a lot different that what bus chasers are feeling.

We bought options at 23.15.  Why did we cash out?  Simple, just look at the chart.

I’m going to use a great line from Wall Street – Money Never Sleeps -bulls make money, bears make money and pigs get slaughtered. Normally in the case where a stock is trading at trend channel resistance after a big run, we’d at least sell off half the positions.

So why did we sell on Wednesday and walk away and lock in our gains. It’s a perfect Put OPTION play and NOT the common stock.  If you have a few hundred shares or whatever taking some off the table here would be a prudent thing to do. Nobody said you had to get rid of all of it but we were all smart enough to buy it at the exact right time so let’s not be pigs about the situation. After all the stock is up 136% in over a year.

A major correction is well over do.

Tags: nflx

This entry was posted on Thursday, December 2nd, 2010 at 8:58 pm and is filed under Contributors, Large Cap Stocks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.