Please check my previous post, I may have changed something since you last looked at itl.
Right now, the Sept 60's are going for 3, which has made me 50% profit inside of about 2 hours. Still, this is paper profit. We will see what happens tomarrow. I suspect it may cycle down before continuing its move up from its breakout.
If I remember correctly, the Oct 60's were selling for wella above 3, something like 3.5. This means I would of had to commit over 50% more funds, which is unnceissarily placing more money at risk. Also, I consider this the cost of the option that I need the price movement of the stock to make up. So I would of had to wait for an additional more than a point move by the stock in order for me to "break even". Since I am considering this a short term play, and I am attempting to make money on small moves in the stock, this position would work against me. Furthermore, the "break even" point would be *beyond* a resistance level at 60 3/4. This can dramatically minimize my chances in making any money and even getting all my money out of the option if the move up by the stock does not continue.
I agree that this stock may be starting an uptrend. But it is just too premature for this type of call. And since we are dealing with short term plays and with volitile options, timing and risk management is everything here.
By the way, besides paying less of a time premium for my option, it will move more inline with the price of the stock now that it is "at the money" compared with the Oct 60 CALL option. So I am maximizing the gains to be had on the movement of the underlying stock. So I rarely choose an option that is more than a month out unless the stock has very good well-established upwward momentum which this stock does not have yet. And then depending on the premium of the option and a look at the S&R levels in my profit/loss risk analysis, I may or may not go more than a month out.
Bob Graham |
