Closing Out the Cameco Trade Experiment

I am pulling the plug on the Cameco trade idea mentioned by Rick Rule during a BNN interview. Cameco is still worth owning in my opinion, but it is a poor candidate for option selling. The options are insufficiently liquid meaning that large bid/ask spreads reduce the actual credits received. The volatility component of the options is also low resulting in small credits. Using options to build an equity position is a great strategy, but it is important to choose a liquid underlying with solid volatility. Whoever suggested this idea to Rick might want to reconsider their strategy.

This is my first losing trade on the blog. It is likely that I could have scratched it if I kept rolling for a few more months, but it is not worth tying up the buying power or the mental resources of dealing with this lame trade.

Closed the position for a credit of $7.39. It cost $7.58 after three adjustments so taking a loss of $190 on each 10 lot.

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