Spreads Making Life Hard

The Stock

This bluechip saw a decent runup. Yesterday 15-20min before the close I decided to buy some puts on it. For a start I didn't trust the Dow being up 120 points. Also this stock seems to have lost steam (unable to smash prior days high). Not going up as fast and mood in general seems less euphoric.

The Warrant

The put had been trading .20/.21 in the morning and then .19/.20 for most the day till the Dow came in so strong, then it went .18/.19. I bought.

My emotions

I had been contemplating going long the put at .20 for a while y'day (14-16CET). So when the Dow was up like it was, I just had feeling that .19 was a good price to be long in case we saw a Dow reversal intraday. The reversal did happen, but to my dismay the Dow sprinted toward the close of US session giving me a very bad feeling about how my Puts would do this european a.m.

Shortly before the options/warrants european opening underlying was 47.95-48. There market maker was pricing warrant .19/.20. So I was annoyed at myself that I've bought this put when stock was 48.30-48.35 and I can't even get out without losing bro.*

Performance

Anyway. Stock went to 47.85 and my warrant .20/.21 - I knocked them out. Net + 800.-, or 4% (rounded). Should factor in that I've got money sidelined that makes the real return more like .8% - and therefor a lot less impressive.

Thoughts

I'm just risking too much for too little though. If price doesn't change I'm out of 5% spread plus .4% commission each way. If underlying moves down .2%-.8% I'm only able to get out taking a hit on commission, so loss of -0.80%.

*Told myself I must find some deal where I can short shares directly with 3-5x leverage. I'd be a lot less inclined getting screwed by the spread then.

Not surprising the market makers are cash generators for banks?!