Option Trading Article of the Week
Option Trading - Reversals - Picking Tops and Bottoms.
Posted by Pete Stolcers on December 16
In today’s option trading blog I will discuss trading reversals. People associate reversal trading with picking tops and bottoms. It is chic to be a contrarian and the masses are always wrong - right? That is certainly not my perspective. TASR was over valued at $30, $70, $90 and $110. All along the way you could have convinced yourself to short the stock and play the reversal. Stocks can stay over bought or over sold for long periods of time before they reverse. In the referenced example, the early shorts never got to see their glory - they were carried…Read the rest of Option Trading - Reversals - Picking Tops and Bottoms.
Stock Options Question of the Week
Option Credit Spreads Gone Bad - Buy In The Short?
Posted by Pete Stolcers on December 16
Question I pulled this question from the archives because the lesson still applies.
When we get stopped out on a put spread why do we close the whole position? I have noticed that if we covered the short leg and keep the long leg the chances are good that we will minimize our loss or possibly make a profit. A good example was the LEH put spread. Our stop was hit and we lost around $900. If we had held the long leg we would be up over $2K as of Friday. I realize that the down side is losing the spread minus the premium but if you are careful and watching what is going on with the markets the odds seem to be in your favor.
Read the answer to Option Credit Spreads Gone Bad - Buy In The Short?
Stock Option Trading Education
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