Repair Strategies With Options by Kevin Lund and Tom Gentile
Here’s a strategy for fixing a good trade gone bad.
As we’ve seen many times in the last year,
a gap down with bad news on a stock
you’re holding can not only be
devastating to your trading account, but
may also test the depths of your skills as a trader. Even if you are the most gifted, insightful trader
around and you are certain the stock will move in your favor,
the financial markets are sure to humble you — as they did
everyone the week following the tragedies of September 11.
Though it may seem hopeless when major failures occur,
there are ways to fix such trades with virtually no additional
cost or risk to you. Using options to fix a good stock trade
gone bad is not only a smart way to get yourself out of a bind,
but it may also be one of the only logical means for repair.