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Option Q&A

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How to Find High Probability Trading Set Ups

Posted by Pete Stolcers on August 27

Option Trading Question

How can I find high probability trading set ups?

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Choosing a Trading Strategy

Posted by Pete Stolcers on August 21

Option Trading Question

How should I choose a trading strategy?

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3 Tips for Successful Options Trading

Posted by Pete Stolcers on August 18

Option Trading Question

I Want To Trade Options - Where Do I Start?

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Covered Calls - Should I Roll Up and Out?

Posted by Pete Stolcers on June 5

Option Trading Question

My question is about the appropriate exit strategy at expiration of a covered call I've written. When is it advisable to let an option get exercised; to roll straight out by purchasing the option at the same strike and selling another call farther out in time; or roll up and out. A few months ago, I sold an option on April 120 covered call. The premium at the time was about $7.50/share. I let the option become exercised at about $160, I think. Since it was so deep in the money, I decided not to roll up and out. But why would it have been a bad idea just to roll the option out to a later date, say July and thereby pocket another another premium? I don't recall exactly what were the option premiums for the April 120s and the July 120s, but there was a profit to be made.

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In The Money Or Out Of The Money?

Posted by Pete Stolcers on May 2

Option Trading Question

Susan R. asks, “I struggle with which option to buy once I find a trade. The In The Money (ITM) options are expensive but they move well. They are risky because they have so much premium. The Out Of The Money (OTM) options don’t cost much but it takes forever to see them go up. How should I decide which ones to buy?”

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How Do Market Makers Pin A Stock Right At The Strike Price During Option Expiration?

Posted by Pete Stolcers on April 13

Option Trading Question

Can you explain how Market Makers manage to keep a stock flat lined right at a strike price on options expiration day?

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Exercise, Assignment and Spreads

Posted by Pete Stolcers on March 10

Option Trading Question

Today Rick W. asks, “I don’t understand what I’m supposed to do when I have a spread and I get assigned on one leg of the trade.”

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Why Aren’t Index Options Listed On This Popular ETF?

Posted by Pete Stolcers on February 13

Option Trading Question

This question was posted in October of 2007, but the answer still applies to future option listings. The QID is a huge product (ETF of double short NASDAQ). I would think it would have a large speculative appeal as a listed index option. Is there some rule or reason there are no options listed for this product?

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Where Should I Turn For Option Education?

Posted by Pete Stolcers on February 4

Option Trading Question

Today Kanu B. states, "I am interested in options and I have attended some free seminars. I paid for a 3 day seminar and learned nothing! Now they want me to commit to 3 more days @ $3500. I declined the offer but they are constant with the calls and e-mails. I'm confused and I want to learn very basic options strategies and I don't know where to turn. I'm willing to pay a reasonable fee to learn. Is this industry regulated?"

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How Should I Hedge This ETF Option?

Posted by Pete Stolcers on January 19

Option Trading Question

I have some USO calls of Feb 30. I need to hedge this position since the underlying stock price will be going down for some time, because of lower crude oil prices. I am thinking of one of the follwoing strategy: sell higher stike price calls for net credit, sell lower stike price for net debit, buy a put at higher strike price. Can you please comment?

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Hedge Or Bail?

Posted by Pete Stolcers on January 12

Option Trading Question

Many experts advise cutting losses at 7-8% below the purchase price of a stock - no matter what. Is it a good idea? Is it a good substitute for hedging by shorting the market?”

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How Can I Use Options To Capitalize On A Pre-Open Move?

Posted by Pete Stolcers on November 20

Option Trading Question

Yesterday a stock dropped 21% during premarket trading due to an earnings "miss". I wanted to buy a put option figuring it would increase 450% in value as the stock dropped. I entered orders before the market opened, but I was not able to get filled. How can I execute my option order in these situations?

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Front Month or Back Month Options?

Posted by Pete Stolcers on August 2

Option Trading Question

Today Dan W. asks, "Your last couple of recommendations have been for near month put options with very little time left. Why not use an option with 30 or 60 days to buy more time for a move? I read that you should never hold a an option with less than 30 days remaining because of declining time value, theta."

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How Does Assignment Work?

Posted by Pete Stolcers on July 17

Option Trading Question

Robert states, "My question regards the assignment of options. I'm not exactly sure how the dynamics work and how to determine if I'm in danger of being assigned. Suppose I sell a call, when does the person on the other side get to buy the call you put up for sale?

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Do You Ever Pivot From Long Put Options To Long Call Options?

Posted by Pete Stolcers on July 4

Option Trading Question

Do you ever consider moving a stock from a bullish watchlist to a bearish watchlist without waiting for your scan to do it for you?

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