Many people try to predict the market, myself included. Which is fine and all, it is healthy to have a view as to where you think the market might go. The real trouble comes into to play when you so stuck on being right that it becomes very dangerous to your trading.
When I make predictions I know that I could be wrong and I am ok with that. Because the truth of the matter is, is that the market does not care what I think. I do not get to set the prices. So as traders we just have to try and make educated guesses.
But there are two things that are for sure when you trade options:
1) Prices fluctuate
and
2) Options expire
This should always be in your mind when you are trading options. These are the only guarantees that you get in the market. So use them wisely.
With that said I have added three new positions this morning while they were down during the open.
ReplyDelete1) Sold 5 puts at $15 strike on BX at $4 with Jan 11 expiry.
2) Sold 10 puts at $7.5 strike on DRYS at $2.71 with Jan 11 Expiry
3) Sold 5 puts on AA at $12.5 strike at $3.10 with Jan 12 expiry.
At this point I have not intention to collect the entire premium. But I do plan to exploit time decay and price fluctuation. Really have a target to achieve 25%-50% of initial premium received. But do not mistake this. I am willing to take delivery of these stocks if my plan does not play out and sell covered calls against them.