A nice and simple trade plan. You obviously have significant capital that you can afford to risk $11000. If you don't mind my asking, what money management rules do you use?
db
SBUX - Just bought 100 contracts June 30 Calls at $0.50
- Thread starter forex-forex
- Start date
db
I own a condo which has gone up a lot, plus I have a day job which I like.
If the SBUX trade doesn't pan out then I will probably stop trading options, I find it takes too much computer time looking at charts. I will leave a small amount in my trading account if I decide to trade again.
I see.
That's the most unusual form of 'money management' I have come across.
Thank you for your candor.
Good luck.
db
This is why I love selling deep OTM options to dumb money.
The Newbie Mantra
Zdreg, depends on the underlying. In this case I sold a few June 30/32.50 bear call spreads on SBUX, and is why I was initially attracted to this board when I saw the title. Overall I am bullish on SBUX and believe that it will recover (slowly). Until that time I will continue to sell call/put spreads.
Cheers.
forex-forex:
A more conservative approach would have been to purchase some deep in the money leaps on SBUX and sold some short term (i.e. June 30) call options against it to bring your cost basis down thereby further reducing your risk until SBUX does recover. Hopefully you have now learned why the smart money in most cases does not purchase far OTM options.
A more conservative approach would have been to purchase some deep in the money leaps on SBUX and sold some short term (i.e. June 30) call options against it to bring your cost basis down thereby further reducing your risk until SBUX does recover. Hopefully you have now learned why the smart money in most cases does not purchase far OTM options.
You will make more money selling these type of options than buying them.