Explore Your Options by Jay Kaeppel
A MODIFIED RISK-REVERSAL OPTION TRADE
So far, a lot of my trading involves simply buying calls when I have a bullish outlook for a given security. And although I have tended to get direction right over time, I seem to be “early” quite often and find myself “underwater” very early in my trades and in need of a big advance to get back to breakeven. Is there any way around this?
Yes, of course. The snarky answer is simple—“time your trades better.” Let’s put that reply under the category of “some things are easier said than done.” Typically, I try to keep this column in the “less complex” category so that even those who are new to options can grasp whatever concept I am purporting to explain. But this time out, we will branch out into a “more creative” approach to trading options ...