Stocks & Commodities V. 27:9 (29): Explore Your Options by Tom Gentile
Product Description
Explore Your Options by Tom Gentile
TRADING PLAN
I bought five Xyz October 160–170 call spreads for $1.79. Here’s my trading plan: Buy Xyz October 160–170 calls spread for $1.79 Max loss: $1.79 Max risk: $1.79 Max reward: $8.29 Ratio: 4.6 to 1 Stop-loss: If Xyz stock closes below $131 Profit stop: Exit three contracts @ tech stop $155 ($3.46 net credit exit) and let the other two contracts run. Time stop: 30 days to expiration Xyz as of today’s close: $152 Current value of spread: $3.00
What else should I build into my trading plans? This is when it gets difficult for me: When I’m winning I want to do too much (make a trade adjustment, watch the market live) because I’m excited. When I’m losing, I don’t even want to open my trading account and look at the balance.
First, let me say you’re doing the right thing by developing a detailed trading plan for your trade and at the same time examining the what-if scenarios. Next, let’s break your questions down into two parts: 1) the actual trade and 2) the psychology of trading options and spreads.
TRADING PLAN
I bought five Xyz October 160–170 call spreads for $1.79. Here’s my trading plan: Buy Xyz October 160–170 calls spread for $1.79 Max loss: $1.79 Max risk: $1.79 Max reward: $8.29 Ratio: 4.6 to 1 Stop-loss: If Xyz stock closes below $131 Profit stop: Exit three contracts @ tech stop $155 ($3.46 net credit exit) and let the other two contracts run. Time stop: 30 days to expiration Xyz as of today’s close: $152 Current value of spread: $3.00
What else should I build into my trading plans? This is when it gets difficult for me: When I’m winning I want to do too much (make a trade adjustment, watch the market live) because I’m excited. When I’m losing, I don’t even want to open my trading account and look at the balance.
First, let me say you’re doing the right thing by developing a detailed trading plan for your trade and at the same time examining the what-if scenarios. Next, let’s break your questions down into two parts: 1) the actual trade and 2) the psychology of trading options and spreads.
FOR THOSE ORDERING ARTICLES SEPARATELY:
*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.
| Take Control of Your Trading. |
| Professional Traders' Starter Kit |
| All these items shown below only $299.99! |
| Click Here to Order |