Looking for suggestion on how to do something properly

Discussion in 'Options' started by anglagard, Feb 6, 2012.

  1. I have a LONG ONLY entry method based on the daily chart, sometimes weekly charts.

    Many times such entry is not achieved as price never gets there.

    However, if I got there, I would be a buyer.

    No further information is known about the time it would take to get there or what targets would be achieved as I trail stop my entries.

    With the above presented, what is the best way to play such scenario with options.

    Thank you much for your time.

  2. Sell 1 or 2 strike OTM puts, then buy the stock at your target price. Sell the puts if they hit ATM, might be sold at a loss.
  3. Hello Forex,

    That's what I have been doing, but was not sure if I was doing it the best way.

    Problem Ive been finding is that the premium is very small, so I go deeper expiration to get more from them, is this acceptable ?

    Not quite sure which expiration to use or if im being too greedy and risky by going real deep.

    Thank you

  4. I don't think deeper expiration is a good solution, most of the time decay is in the last month. For a premium seller more time is not your friend.
  5. Ok say I got February selling for .30 cents and December selling for 4.00.

    If 4 drops more than .30 I made more than .30 cents.

    That's what I meant :D

    Probably a dumb thing right?

  6. My guess is that it will take longer than 1 month for the December option to decay by $0.30 plus Bid/Ask spread and commissions. Could even take a couple months, sort of like watching paint dry.
  7. Ok, so sell the nearest month and when it's ready to expire worthless, start with the new month ?

  8. Yes ....... Maybe enter the position 4 / 5 weeks before expiry.