Hi Traders, one nice feeling you get when trading with lots of cushion is the way a stock can fall in price and yet your premium is also dropping.
EX: CMG / I have the Jan 180 and on Friday the stock was trading around 238. today the stock dropped around 3 pts and yet the premium had dropped from .60 / .80 to .55 /80. This lets you close or continue to watch the positions at a possible break even level. Where put sellers get a bad name or in trouble is when they go for the big bucks and use a close strike price. After the opening this morning they are already underwater and struggling. This is especially true in the longer options months such as this current month.
Use caution, use cushion and avoid reaching to far on the opening of a position.
Good trading
Jerry
3 comments:
hey jerry. im slow to pull the trigger on a trade. i like the 95 strike on wlt tading at 120 and company looks strong but there price is up 70 percent this year and a lot of people are shorting the stock. everything else seems ok.. any thoughts on this 3.1 percent trade
I Have not used WLT in a while so rusty on the activity of it. But if you have trouble pulling the trigger that usually means that an inner part of your brain is saying "uhhh, maybe we should not do this". I try to listen to my subconscious whenever i can.
There Are plenty of stocks out there that might make you feel safer. Safe is the answer..
OK THANKS. I PAST ON THIS TRADE AND MADE ANOTHER ONE.
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