I was thinking about my PTEN trade earlier this morning, and I figured I would think out loud about a few things. In case you missed it, I bought the dip with an aggressive option selection last week. Click here if you want to see the original post. Now, I am a week closer to expiration, only $1 short of my price target, but nowhere close to the reward I figured I'd have. Dammit.

Options are one of the few sports where you can ultimately be right in your forecast, and still lose money. If you are too aggressive or at times not aggressive enough, you won't retrieve adequate returns. Having said that, let's analyze the trade. Here is a quick snapshot of the chart...

Even though I caught a 7% move in the stock so far, the problem is that I figured I would have been further along in the trade by now. In fact, without Friday's meltdown, I thought we'd be at the highs by today. Go figure.

Because I was expecting the move to happen quickly, I was just in buying a short dated option. However, buying short dated options leaves no room for error. The longer it takes PTEN to get to the highs, I am battling time decay (which is a losing battle when you have no intrinsic value). The July options would have been less sensitive to time decay, but based on the increased price, would have been less attractive from a risk reward perspective.

What I expected to see in this trade was an increase in time value as the option became near the money. My calculations estimated a $1.30-1.50 premium based on my forecasted move, which was great considering that I paid $0.50 for them. Like I said, now that there are two weeks until expiration...what to do?

Like I said, I was way too aggressive in my strike selection. Here is how the near-money options have faired since the opening of 6/2.

June 30 - opened @ $2.00 / now trading for $4.20; a 110% increase

June 32.50 - opened @ $0.85 / now trading for $1.50; a 76.5 % increase

June 35 - opened @ $0.35 / now trading for $0.50; a 43% increase

At this rate, I don't expect the stock to be trading all that much higher than $35 by expiration. If we land anywhere near that, the option would be relatively worthless. If I get lucky and see a big increase before then, I might be able to grab a few bucks and sell early.

I could walk away at the first sign of weakness, which I imagine will be the road I take...at a later point in time.

Or, you could get fancy here and try to leg into a spread; offsetting a possible loss. If you'd be willing to bet that PTEN finishes below $32.50, sell the calls and bring in $1.40. If you do this, hope for a short term top here.

In case you were wondering, no, I never do this.

Trade on.