Hi Don
Wanted to say "thanks" for the updates you provide - always good reading.
In addition to puts, I have been trying to establish bearish call spreads. On one of these frequent dips, I would buy cheap out of the money calls. If the stock rallies to the strike price, I would sell deep in the money calls (sell half the number you are long). For example, buy 20 Aug 47.5 HD calls; when (if?) HD hits 47.5 (or so), sell 10 Aug 40 HD calls.
I am using this strategy only on stocks with reasonable or (better yet) inexpensive premiums but yet have decent stock movement or still have their "story" intact. This obviously rules out dell, amzn, etc. due to premiums.
Stock should be pretty liquid, with decent option activity. This strategy limits your loss, in that the opening position involves small outlay of capital. (I am also trying to leg into bullish put spreads, puying cheap puts on strength as the opening position). Have been trying to buy the calls when stock is at support and buying puts at resistance (note: I said "trying" <ggg>).
Finally, given the, uhhh, volatility of the market, I am planning my option trades on a stock and usually entering as limit orders the first one or two steps in the trade either before the open or by 10:00.. I don't want to get locked out of entering trades if action gets hot and wild, and I also would like to take advantage of wild swings, which pre-set trades should allow me to do.
Again, thanks for all your great work.
Mike |
