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Strategies & Market Trends : Classic TA Workplace

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To: Henry J Costanzo who wrote (134452)	7/16/2006 10:47:11 AM
From: venividivici	Read Replies (3) of 209892

OTOH that premium typically decays only modestly in the first month or two. That decay is the real cost of the "insurance"...and it can turn out to be very little.... This is true, but why not just buy front-month options and stop out of the position and re-establish after further analysis gives you a new entry point? That way your e-wave or other analysis becomes your 'insurance' and probably costs even less than the time premium. There's definitely more than one way to be successful in trading, but I would think that the opportunity cost of holding a six-month out option would be higher than just allowing yourself to get stopped out of a front-month option.

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