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Hedge Trade

Hedge Trade

Hello Smart Option Sellers! Before I get to the alert, don't forget to read my new "Put-Selling Basics" guide I have on the website. It's a great refresher for both experienced and new traders. It's totally free. Just click here to read. Target Corp. (TGT) We're currently holding a put-sell position on the TGT July 2017 $45 put options. Although TGT announces earnings tomorrow morning before the opening bell, we're going to hold our position as-is, as there's no reason for us to take action. I always say that earnings are a crapshoot and you never know which way the stock is going to move. I've seen earnings results good and bad and the stock moves completely against all logic in the wrong direction. Even though we're going to hold the trade as-is, it doesn't mean we can't take advantage of an opportunity. In addition to their monthly options, TGT has weekly options that expire every Friday as well. These are great for hyperactive traders who need to get their fix on. I find them useful for situations like this where you want to take a quick and cheap stab at a purely speculative and fun trade, or for hedging purposes against a position already in place. For us, a move up in TGT stock after earnings is the best scenario for our put-sell position. Why? Everyone should know this by now. Because when stocks rally, put option prices go down. That's how we make a profit. We sell the put options to get into the trade, and when their prices go lower we can buy them back cheaper and lock in a gain. But we don't know which way Target's stock is going to move tomorrow morning after they report their earnings. It can jump, it can fall, or it can go nowhere. As an extra and "unofficial" trade, I'm letting everyone know that if you feel like protecting, or making a cheap trade today on a potential drop in TGT stock, you can buy a put option. Here's what you can choose to do (unofficial trade): Buy (buy-to-open) any of the TGT March 3, 2017 put options with a strike price in the range of $55 to $60, for a limit buy price of no more than $.05 per contract, today only. Check the option prices before you decide to buy. Look at every strike from the $55 to the $60 strike prices. They all should be trading between $.01 - $.05 per contract. If you can get the $60 strike for $.05, then choose that one. It's up to you. A few points: 1. You can partake in this trade even if you are not currently holding the TGT put-sell position. It is purely a speculative trade and you could end up losing on it. You decide on how many contracts to buy. Think twice before entering. 2. If you decide to partake, you will only buy these put options today. Do not buy these at any other time. 3. These are weekly options that expire on this Friday, March 3, 2017, so the trade will be very short. After earnings are announced, you will know very quickly whether they will be profitable or not. 4. If you're going to get involved, make sure you trade the correct options. These expire on Friday March 3rd. Double check your trading platform ahead of time. 5. If you are buying these to hedge against the put-sell position, only buy the same amount of contracts as you've sold of the $45 puts. 6. This is an "unofficial" trade. I will send another update tomorrow to talk about the results. That's all for now. Let us know if you decide to get in. You can always reach us here. Regards, Lee Let's Grab That Cash!


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