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Politics : Idea Of The Day
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To: jjs_ynot who wrote (26422)5/21/1999 5:45:00 PM
From: Judy  Read Replies (1) of 50167
 
When a short put trade moves against you so that a repair or close out was needed (ie. the stock moves below threshold support) the contingency action would be to short the stock or complete a straddle on retrace up.

Think clearly ... you would not have needed to repair the straddle. If the trade ran severely in one direction ... the stop loss would get hit and the opposite leg should reduce the potential loss on the trade to break even or slightly better on immediate close out.

The key is not the options strategy, the key is anticipating the correct trading action in the stock and to close out the position in a heartbeat if the trading action violates the acceptable boundaries. These boundaries are established prior to initiating the trade when one delineated the risk/reward.
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