Friday Q&A

Friday Q&A Hello Smart Option Sellers! Here's your Friday Q&A installment. Q: just one comment on the article re rolling you mentioned the use of a stop loss correct me if i am wrong but didn't you advise not to use a stop loss A: In the very worst-case scenario, if we have to shut down a position, it will be after we've tried to "roll" the trade, maybe even multiple times. If the stock continues to fall and drops 35% below our current strike price, we will unwind the whole trade. We do employ a stop-loss - it's if the stock price drops 35% below our strike price. I don't recall saying otherwise. I don't foresee that situation happening to us very much here though at The Smart Option Seller. In fact, it would be a very rare occurrence. Q: Hello Lee, Timing is critical when selling put options. That's really true when you issue your alerts. Have you considered establishing a "watchlist" for your subscribers? The reason I ask is since I have been a subscriber several trade alerts have come out just after the stock is bouncing off of support and the put options are rapidly dropping in value. Having a watchlist to monitor, subscribers who may be very adept at watching long term support levels could then monitor your watchlist to be able to take more positions more often, For myself I would like to be able to spread out my allocation of positions more to avoid having to overload on a single position to generate income (even though it is a very conservative position) which you always recommend. A: Yes, timing is very critical when selling put options (as with many other forms of investing). Every once in awhile I will put out a list of stocks that I'm watching, but that has lead to some "early" put-sellers who have pushed the option prices down prematurely. For that reason, I&