Subscriber
Some people have asked how options trades are set up.
First, this is not expert advice; options are risky and traders can lose substantial capital.
This explains the current options approach:
Subscriber
Some people have asked how options trades are set up.
First, this is not expert advice; options are risky and traders can lose substantial capital.
This explains the current options approach:
The goal is to enter names that aren't normally traded — highly volatile stocks that require sitting through large swings. Typically the target is a high‑beta name with a high ATR (wide intraday range) and a bullish market backdrop.
The stock should trade millions of shares — the higher the volume, the lower the manipulation risk. A technical setup is used; candidates should be above the 50‑day moving average and not too far extended.
A recent large prior move is another criterion, showing the stock can move like that again.
On the buy side, near‑the‑money call options 3–5 months out are chosen. Insufficient time to expiration has been the main cause of past failures.
Selling is done in pieces, usually in thirds. Targets for the first two tranches are about +100% and +200%, with the final tranche left to run.
No position is held within one month of expiration — the remainder is closed at that point regardless.
Risk management calls for exiting if an option loses 50–60% of its value.