Just for your information, I've made two new additions to the Options Portfolio. It is explained in the Daily Journal.

Larry

Hi Larry

I have some questions on the Options Portfolio:

1) Could you please explain how you came up with the stops for the 2 new addtions to options portfolio. I read your response to AMGN and I try to apply it to the new additions and I need some help.

2) I noticed the stop price is based on the time of entry. Would you ever base the stop price on the closing price of the day?

3) I was able to find the delta for these options in my OptionsXpress account but when I went to the ivolatility link http://www.ivolatility.com/home.j and brought up the stock details, where and how do you get the delta value?

Maggie

Would you enter a stop order for any of the options in the portfolio?

Or do you sell when the price of the stock reaches its stop price and only then at that time would you liquidate ?

Maggie

Maggie,

1) Could you please explain how you came up with the stops for the 2 new addtions to options portfolio. I read your response to AMGN and I try to apply it to the new additions and I need some help.

I posted the stop strategy yesterday in the Daily Journal when I explained the two positions. With PTEN I’m starting off with a Parabolic SAR stop. No particular reason. It just seemed to fit the amount I wanted to risk. With SINA I’m using a close above the previous high as a stop. There is no one right place to put stops. Sometimes I may use SAR. Sometimes I may use a multiple of ATR. Sometimes I may use a price that represents a violation of support or resistance. Sometimes it may just be a money management stop. The main thing is to limit losses to a small fraction of equity. When a position goes my direction I'll adjust the stop.

2) I noticed the stop price is based on the time of entry. Would you ever base the stop price on the closing price of the day?

All three stops are based on the closing price.

3) I was able to find the delta for these options in my OptionsXpress account but when I went to the ivolatility link http://www.ivolatility.com/home.j and brought up the stock details, where and how do you get the delta value?

IVolatility.com has an options calculator that will give you the greeks. You will see it on the drop down menu.

Larry

Maggie,


Would you enter a stop order for any of the options in the portfolio?

Or do you sell when the price of the stock reaches its stop price and only then at that time would you liquidate ?

With directional trades (straight puts and calls) I always base the stop on the price of the stock, not the option. The option is merely a substitute for the stock.

Larry

Thanks Larry.
Maggie