As you may have noticed, I often times circle back to the same tickers for my trades several times over again. I think it's a good idea for everyone to have a short list of stocks they get to know well. So when those stocks hit levels that are too low or too high, trades can be taken.
My suggestion to you is develop a list of 5 of your favourite stocks that you think have good long term value. Also, make a list of 5 stocks that you hate, that you think are terrible long term value. Put them on a watch list, follow their progress, pay attention to their earnings dates and company announcements. That way, when your favourites are beaten down in price, or the ones you hate are touching very high valuations, you'll know what to do. Start with 5, and over time you'll add to it. Eventually you'll have a nice watchlist of stocks to choose from, so that the trades you are taking are based on a good understanding of the underlying stock.
Today I'll circle back to one we've already traded before for a new "Wheel of Fun" trade. Activision Blizzard (ATVI). Its price is nearing recent lows, so it's a good candidate for a Wheel trade.
1 year chart of ATVI:
"Wheel of Fun" Short Put on ATVI (Activision Blizzard)
Sell to Open 1 x 18 April 19' ATVI 40.00 Put Credit: ~ 1.30 Days to expiry: 49
* prices move around, so just get the highest premium you can.
- I always trade these "cash-secured" meaning I reserve the full capital required to own the shares outright if assigned
- 1 option contract = 100 shares if assigned - 100 shares of ATVI @ 40.00 = 4,000 - This trade requires 4,000 per contract
- The VTS Discretionary model portfolio is reset at 25,000.00 - 4,000 is 16.00% of the portfolio
* You can scale your trade to roughly 15% - 20% of your VTS Discretionary funds
- I always use a 10% stop-loss on this type of trade - 4,000 per contract is what the trade is valued at - 4,000 * 10% = 400
* If I'm down more than 400$ per contract I will close it
Please check out the strategy video for the Wheel of Fun, and feel free to ask any follow up questions: Volatilitytradingstrategies@hotmail.com
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* All information, analysis, and articles on this site are provided for informational purposes only. Nothing herein should be interested as personalized investment advice as I make no recommendations to buy, sell, or hold any securities or positions. I'm making this website available "as is" with no warranty or guarantees of it's accuracy, completeness, or currentness. If you rely on this website or any of the information contained, you do so entirely at your own risk. I do not hold myself out as a financial advisor and nothing herein is a solicitation for any fund or securities mentioned. Although I may answer general questions about the information herein, I'm not licensed or registered under security laws to address your personal investment situation. Past performance is not indicative of future results. Any and all financial decisions are the sole responsibility of you the individual.