The Key to Selling Short

Written by Murray Priestley


Continued from page 1

Well it’s all about what happens torepparttar option price leading up to expiry. You see whilerepparttar 140775 probability ofrepparttar 140776 market reaching $63 for example may have been low, there is stillrepparttar 140777 risk ofrepparttar 140778 option price inflating to unacceptable levels based on smaller movement inrepparttar 140779 market.

The market would have only had to shoot up to $60 or $62 within a short time frame and that $63 call would be showing a significant loss. From thererepparttar 140780 market could well turn around, but you may not be able to afford to hold it that long to find out.

Holdingrepparttar 140781 $66 and $68 calls gives room to breathe even whenrepparttar 140782 market does not do what we want. Ifrepparttar 140783 market made it up to $60 for example, we would have had to adjust a trade inrepparttar 140784 $63 calls. The trade with higher strikes would not need that adjustment.

The Right Price

If you have a car to sell, you would have a fair idea of what is too low, what is fair and what is aboverepparttar 140785 market. The same goes with options. You have to know what is a good price and what is a bad one.

Atrepparttar 140786 time,repparttar 140787 Crude Oil calls were sold for a good price. Analysis showed volatility to be overvalued and therefore it would berepparttar 140788 right trade to make.

Pricing is a function of things such as time and volatility. These are factors all option pricing models use. The key is knowing how to interpret these models. Interpretation will tell you what is a good price and what is a bad one.

Effective trade management

In an ideal short option trade, there is no management required. The idea is to seerepparttar 140789 option expire worthless withoutrepparttar 140790 market ever getting nearrepparttar 140791 strike price. Things don’t always work like that however and that is why every trade needs a plan. Generally there are three actions you can take whenrepparttar 140792 premium goes against you: •One: stoprepparttar 140793 trade out at a loss and walk away. Of course this requires you to set a stop loss level, preferably before you enterrepparttar 140794 trade. •Two: rollrepparttar 140795 position. This simply means closingrepparttar 140796 existing trade and establishing a new short position with a higher strike price and/or a longer time to expiry. The key here is to decide when you should initiate a roll. It is best to agree on a price inrepparttar 140797 underlying as a trigger. For example: “Ifrepparttar 140798 market gets to $63, I will roll my $66 calls”. The trigger point can change as time passes since a rally of $5 today will affect options differently than a rally of $5 overrepparttar 140799 next month. Additionally,repparttar 140800 choice of what to roll to should be subject torepparttar 140801 same requirements as above (i.e.repparttar 140802 right options atrepparttar 140803 right price). •Three: establish additional positions to either decrease risk or increase potential return fromrepparttar 140804 total trade. One could easily write volumes on different strategies that could be implemented. However there is a simple premise here: if you want to add a position that will stand to cover any existing loss, you will be taking on extra risk. Also if you want to add a position that will hedge any further risk, it will come at a cost. It’s all a balance of risk and reward.

Now it is true you could follow all these principles and still lose money. There is risk in every trade no matter how well planned. However, followingrepparttar 140805 above guidelines (as we do at witrepparttar 140806 Option1 trading recommendations) can help moverepparttar 140807 odds in your favour.

Written by Guy Bower & Murray Priestley, developers of Gold Options Made Easy – the Professionals Approach to Selling Options, www.GoldOptionsMadeEasy.com. Guy is a licensed trading advisor.


Debt Consolidation – Ways to Save on High Gas Prices

Written by Charles Essmeier


Continued from page 1
you have a credit card that offers a cashback bonus, such asrepparttar Discover card, use that for gas purchases instead of an oil company credit card. Discover even offers a credit card now that is made especially for gas purchases. It offers a larger cashback bonus for thanrepparttar 140741 regular Discover card.

  • Some gas stations offer a lower price if you pay cash. If that’srepparttar 140742 case, then pay cash.


  • Shop around. The gas stations closest torepparttar 140743 Interstate may not haverepparttar 140744 lowest prices. You might save a bit by purchasing your gas a bit further fromrepparttar 140745 highway.


  • Drive at or nearrepparttar 140746 speed limit. Most cars get better gas mileage at 55 miles per hour than they do at 70.


  • Shop around before you travel. There are several Websites, such as GasPriceWatch.com, that can show you gas prices throughout your travel route.


  • Each ofrepparttar 140747 items listed above will offer a slight savings inrepparttar 140748 price of gasoline or in gas consumption. The effect of each one may be small, butrepparttar 140749 cumulative effect should be noticeable. And every penny you save on gas is a penny you can spend on a memorable souvenir, instead.

    ©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to debt consolidation and credit counseling, and HomeEquityHelp.net, a site devoted to information regarding home equity loans.


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