Friday Q&A Hello Smart Option Sellers! Everyone should be getting filled on the new BIG put-sell play from today's earlier alert. Prices are obtainable! As far as the Q&A, most of the questions that have come in are specifically about the potential new option credit spread service. I will get to those questions in a full Q&A alert probably in the next week or so. But I still want to give Smart Option Seller members a chance to vote on the subject, so once again, if you have note voted by using the alert from Friday August 17th, please go back and mark your vote within that alert only. At this time, about 55% of you have voted. Thank you! Here's today's questions: Q: If you get a moment or two, can you interpret?
I frequently get notes from Fidelity indicating UNUSUAL OPTION CLASSES going on for the day--sometimes it may say UNUSUAL PUT OPTIONS IN XYZ STOCK.
A: There are many services out there (free & paid) that can alert you to unusual options activity for a certain stock. This is most likely a volume-based alert which flags a certain option (put or call) that has much more volume than normal. Sometimes this can be an advanced warning that the stock is about to make a very large move. It's usually a hedge fund or large trading house that is taking on this position. Unless you get real concrete information on how the trade is being used, it most likely won't be worth your time to piggyback it. For all you know, they may just be using the options market to hedge a stock position. In that case, there will be nothing to gain by following it. The only time it could be worth following up, is if it's an opening play by the trader, and you can get some other information about the stock that no one else knows about. That in itself is pretty hard to get, unless you have an inside source. And even with that, you better be real careful about obtaining insider information. No one wants to go to the Big House! Good luck! Q: Hello Lee, How do you determine an appropriate stop loss price for a call option as opposed to a security? A: Even though you're trading an option, I would still base the stop-loss on the price of the stock. If your typical stop-loss on a stock is 25% below your entry point, then I would use that level to get out of an option contract too. Option prices are sometimes very wide, and a stop-loss can be triggered very prematurely, even without the stock moving. Stick to using the stock price as a guide for your stop-loss. Well, that's all for today. Have a great long Labor Day weekend! Continue to hold all other positions as-is. Contact me here Regards,
Lee Let's Grab That Cash!
Current Portfolio Continue to work all other trades as instructed and continue to hold all other open positions as-is. See the Current Portfolio below for current prices & instructions. Note on the Current Portfolio - if you are a new subscriber and don't have a position yet on any of our trades, make sure you enter your order at the original recommended sell prices. Do no enter any order unless the current option price is at, or higher, than the official recommendation. If you are unsure or have any questions, please ask us!