If you knew this, how many contracts would you buy/sell?

Discussion in 'Strategy Development' started by coolweb, Dec 11, 2005.

  1. Hello,

    Lets say.

    1) Current range is:
    The price of an equity within the range of $50.20 - $50.30
    10 cent dead zone.

    2) You have a 90% probabiliy it will drop to at least $45.00

    3) IT is also trending down.

    4) The price should never break $50.31

    You can also use YM/NQ/ES futures with the same situation.

    How many contracts or stocks would you go short?


    10 contracts?
    2 contracts?
    50 contracts?
    500 contracts?
  2. scale in with three tiers
  3. If liquidity is not an issue and there is a 90% probability that the stock will drop 5+ points in my favor and I can use 50.31 as my stop for my entire position so I am risking 11 cents to make 5+ points, I would short at least 100,000 shares. I'd be willing to lose $11k to make over 500k. Of course this scenario is highly unlikely, as no one can predict with 90% certainty where any stock will go but with this example, I would short as much as I could (of course my firm would never give me that much buying power :D ).

  4. syrre


    hello coolweb,

    how is your trading these days?