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Lions.. as you know I do send out stock tickers/stock picks on a regular basis along with play suggestions in this newsletter. SEE MY ENTIRE LIST OF STOCK PICKS- CLICK THIS LINK: https://traderschoice.net/about-traders-choice/
It seems that although I DO NOT recommend doing it, some of you are still buying options instead of selling them/setting up credit spreads- and losing money.
In order for a trade to work in which you are buying options, calls or puts, you need the underlying asset to move quickly in the expected direction. Even if the underlying asset moves sideways you will lose money buying options because of time decay, AND IF IT HAPPENS TO MOVE AGAINST YOUR EXPECTED DIRECTION- YOU LOSE MONEY EVEN FASTER.
If you still insist on buying options instead of selling them, you should hedge your positions with one of the strategies listed below.
1. Long Strangle
The long options strangle is an unlimited profit, limited risk strategy. This strategy is utilized when the trader/investor believes that the underlying stock will encounter high volatility in the near term. Significant gains are attainable when the underlying asset price makes an especially strong move either upwards or downwards.
To set up a long strangle strategy, the trader/investor will purchase an out-of-the-money call option and an out-of-the-money put option simultaneously, on the same underlying asset with the same expiration date.
2. Long Straddle
The long straddle options strategy offers unlimited profit, while limiting risk. This strategy is used when the trader/investor believes that the underlying asset will experience considerable volatility in the near term.
A long straddle strategy can be set up as follows. The investor/trader simultaneously purchases a call and put option on the same underlying asset with the same strike price and expiration date.
***AGAIN I DO NOT RECOMMEND BUYING OPTIONS UNLESS YOU ARE EXCEPTIONALLY SKILLED AT DOING SO.
INSTEAD, UTILIZE ONE OF THE TWO STRATEGIES I POSTED ABOVE… OR LEARN TO SELL OPTIONS/SET UP CREDIT SPREADS.
IF YOU WANT TO LEARN HOW TO SELL OPTIONS AND SET UP CREDIT SPREADS ALONG WITH MANY OTHER TRADING SECRETS, CLICK ON THIS LINK: https://www.lulu.com/en/us/shop/gregory-mannarino/a-not-so-random-walk-on-wall-street/ebook/product-n66ymz.html?page=1&pageSize=4
<<<Even if the underlying asset moves sideways you will lose money buying options because of time decay, AND IF IT HAPPENS TO DROP- YOU LOSE MONEY EVEN FASTER.>>>
I would tend to agree. I've got 4 options sitting there getting eaten alive by time decay. The prices of my call options are either going down or sideways. Nice! Hahahahahahahahahahaha! 🤣 Frankly, I'm GLAD it's happening to me because it forced me to do the smart thing and invest in an instrument with ZERO time decay....CRYPTO! Hahahahahahahahaaa! NOW I'm trading an instrument with no time decay AND there is no expiration date on it. Once I buy the cyrpto I OWN IT until I sell it and THAT buddy makes me Happier'n-A-Pig-In-Slop!
If you buy a call or put option you don't own it. You own it until the day of expiration.
I still have long dated call options which I will let sit there until they produce a profit or expire worthless. The GOOD thing that has come from all this is I have gained the EXPERIENCE to know that it is better to own an instrument that I OWN instead of an istrument that I own until the date of expiration. I have made one more good good decision that has made me 25% profitable in my crypto trading account so far in two weeks and THAT makes me happy as hell. Hahahahahahaahahahahahahahaaaa! 😃 Eeeeeeeeeeeeeeeeheheheheheheheheheheeeeeeeeeeeeeeeee! 🤣 🤣 🤣 😈 😈 😈
Traders.....don't lament or beat yourselves over the head for making bad mistakes. Simply adjust. Bad mistakes are a GOOD THING! That's how you learn. After losing and losing so much money I decided to buy an instrument I can afford and that I OWN...crypto! Now I'm happy and at peace with my trading and profitable. 👍 😃
Greg, out of curiosity, all of 2020 and the beginning of 2021 you were doing nothing but calls….. why the change to puts recently?