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Strategies & Market Trends : LastShadow's Position Trading
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To: browser who wrote (4290)12/14/1998 10:05:00 PM
From: Magnatizer  Read Replies (2) of 43080
 
browser

I try to keep it simple with my option plays. Not sophisticated enough to really dial in the absolute best play. I go by a general rule of thumb, which is..

Depending on the play I will choose either to go a short term route or long term route. In AKLM i choose the longer term route which, in this case, I wanted to get a couple of earnings announcements in before expiration.

So, I decided to go with Aprils. Next decision was which strike. If I buy 4 or more months out I always choose the closest out of the money option.

If I had decided that AKLM looked to run hard and fast I would have likely choosen to go with a shorter term option. For the sake of example lets say I thought AKLM had a good shot at 13 by expiration this month. I would have picked the nearest in the money call, probably Jan 7.50s. This would give me room to be wrong by a few weeks and, having the options in the money, I take advantage of price moves basically tic for tic.

ht
david

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