Get Your Stock Option Trading Questions Answered
Greetings fellow option trader!
Do you have any questions I can answer for you?
I was wondering if you had any questions about options, option trading, or other related topics that you have not been able to find answers to either on my site or anywhere else. If you do, great! I am ready to answer (if I can). But please read this entire post to find out how to submit your question.
I had an idea to make myself available to answer any and all questions as well as I could. No question is out of bounds and I will try to answer all questions submitted whether you are a member of the OptionGenius site or not. There is no charge for this.
But I do ask the following:
- Please give me enough time to answer.
- Please do not ask me anything that would require a specific answer. I am not a licensed investment advisor and cannot give you specific investment advice. It is against the law.
- Please do not ask me to reveal all my trading rules. They have taken years and years to develop and I am not going to give them away.
- Put some thought into your questions. I don’t want to write a book to answer one question.
Here’s how this will work:
You can ask your question or questions by asking it from the site’s Contact Us Page. Please include your full name, email address, and if you are a member or not. (It does not matter but I would just like to know)
Stock option trading strategies
You will NOT receive an answer via email. I am going to gather all the questions, combine them, eliminate the duplicates, and then start working on them. Once I am done I will put them all together into a report and email the entire report to anyone who asked a question.
Yes, you will get a copy of all the questions and all the answers. But I will only email the report to those that asked a question. No question – No report.
DO NOT ask questions like these:
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- I am 54 years old, making $100k a year and $85k in my IRA. What do I do with my money? (not enough info and I cannot answer such personal questions)
- How do I make 20% a month? (Try to be realistic in your expectations)
DO ASK questions like these:
- When should I use a Calendar Spread vs a Butterfly Spread?
- How do I find good covered call candidates?
- How can I tell if option selling is for me?
Just in case you are wondering why I am doing this, it is to create a report I can use as a giveaway that has real value, and to generate ideas to write about on my blog.
Remember, only those asking questions will get the report. Make sure to ask your question soon. I do not have a deadline in mind but I will have to cut it off in a week or so depending on how many questions I get.
Oh, and I will not be using your name in the report. So you don’t have to worry about having your name published anywhere.
Looking forward to seeing what you come up with.
Allen
I’m an option buyer. What kind of strategy would you use if you feel like the trade is going against you, because I know it is technically possible to place a stop loss on options but not recommended due to an option’s complexity.
You are asking the wrong person. I wouldn’t buy options with your money, much less my own unless it was a rare situation where it was coin flip on earnings or something like that.
In a covered call strategy, is there a reason why you should not use a deep in the money long call (later month) instead of the actual stock to cover?
A deep ITM call with not be a 1:1 mover with the stock unless it had a delta of 1. It would be cheaper but will still have time decay and you will not get any dividends that might be paid.
In adjustment strategies for credit spreads where you find that the stock is moving in the wrong direction for your option, do you think it is generally best to 1) roll out and down (or roll out and up in the case of calls), 2) convert your credit spread into a debit spread, 3) convert your credit spread into a butterfly, or 4) just get out and learn your lesson (e. g. not to play with that volatile stock again)?
And at what point do you generally make this adjustment — when the stock moves 5% in the wrong direction, or 10%, or gets to the strike price of your spread, or what?
Steve,
All that you mentioned are very good techniques. The answer is “it depends”. As a general rule, if you have less than 2-2.5 weeks left until expiration, either roll or get out. If you have more than that you may want to either get out, hedge (add longs, I guess that’s what you mean by making it a debit spread), or, do the butterfly. There are other mitigation techniques, too. And, it depends on your market outlook. Is this thing typically a slow mover, go sideways? You will be just guessing, but, what is your bias?
Marc
Most people tell you how to get in on an option, but they never tell you what to look for and when to get out of a trade ! Do you have any lessons on how to do this ?
Lots. But it depends on what the strategy is, what your trading plan is, etc.
First you pick a strategy to trade, then a trading plan and the plan should tell you how and when to get out.