@raydog19771 Yes it is. You missed the part where the Income Method adjusts the cost basis to below the strike price of the put. If the market moves against you at this point, you cannot lose. If it continues in your desired direction, you continue building your position.
1) A good entry (of which you already know to employ.)
2) A pre-planned exit. (of which you have already built the emotions and discipline for: A profit target, trailing stop, or stop loss.)
3) To be aware that its just all you, predicting something that one DOES NOT REALLY KNOW FOR SURE HOW THE MARKETS WILL PERFORM FROM ONE MINUTE TO THE NEXT -- only that you DO THESE THINGS.
Um, no... if you were paying attention you'd realize that the GRAIL is all about money management, not how to do option plays or pick stocks. It's as immaterial to know how to do an options play as it is to pick a stock... no matter WHAT you do, it must include rules on the management of losses and gains.
@freedomschool oh stop the naivety, you know that you need a winning strategy to compensate for the losses. The average investor/trader is not going to be correct even 40% of the time. Present a real trading strategy and then people will stop being so pessimistic.
I pretty much side step the issue of "slippage" by using super liquid vehecles of trading (such as the EURUSD and GBPUSD). Sure, these forex entities may still slip, but in reality, you will get your stop prices. And if you are really that paranoid, you can even get brokers who guarentee limits and stops 100% of the time.
the cost of the put option to protect the downside will almost always be greater than the "cost" of slippage due to a market stop order, especially if you are only trading optionable stocks since they are more liquid. having said that, i agree with you that money management is vital to successful trading.
August 16, 2006: DAKT has an A+ rating from IBD. Opens at 23% BELOW the close of the previous day, and trades 13 million shares more than its daily average as institutions bail. Hmmm Not where I wanna be with a stop order. Also... October is coming... Puts are safer
Nothing! That's why it's VITAL to cover your ASSets with a legal, enforceable contract. The put option guarantees the lowest exit price... "STOP" orders leave you as prey to the MM's.
what do you do when the stock goes bearish?? in your scenario, you would lose your debit on the LP and then what? that's not "bulletproof" at all
raydog19771 7 months ago
@raydog19771 Yes it is. You missed the part where the Income Method adjusts the cost basis to below the strike price of the put. If the market moves against you at this point, you cannot lose. If it continues in your desired direction, you continue building your position.
freedomschool 7 months ago
TRADING PANACEA.
I HAVE THE HOLY GRAIL OF DAY TRADING.
So basic and simple, but tough.
1) A good entry (of which you already know to employ.)
2) A pre-planned exit. (of which you have already built the emotions and discipline for: A profit target, trailing stop, or stop loss.)
3) To be aware that its just all you, predicting something that one DOES NOT REALLY KNOW FOR SURE HOW THE MARKETS WILL PERFORM FROM ONE MINUTE TO THE NEXT -- only that you DO THESE THINGS.
Eddy.
eddyvideostar 1 year ago
OK, so your holy grail is about options trading for dummies... Great news...
gino713 3 years ago
Um, no... if you were paying attention you'd realize that the GRAIL is all about money management, not how to do option plays or pick stocks. It's as immaterial to know how to do an options play as it is to pick a stock... no matter WHAT you do, it must include rules on the management of losses and gains.
freedomschool 3 years ago
@freedomschool oh stop the naivety, you know that you need a winning strategy to compensate for the losses. The average investor/trader is not going to be correct even 40% of the time. Present a real trading strategy and then people will stop being so pessimistic.
prodigee411 1 year ago
I pretty much side step the issue of "slippage" by using super liquid vehecles of trading (such as the EURUSD and GBPUSD). Sure, these forex entities may still slip, but in reality, you will get your stop prices. And if you are really that paranoid, you can even get brokers who guarentee limits and stops 100% of the time.
longtang1234 4 years ago
the cost of the put option to protect the downside will almost always be greater than the "cost" of slippage due to a market stop order, especially if you are only trading optionable stocks since they are more liquid. having said that, i agree with you that money management is vital to successful trading.
trader0054 4 years ago
August 16, 2006: DAKT has an A+ rating from IBD. Opens at 23% BELOW the close of the previous day, and trades 13 million shares more than its daily average as institutions bail. Hmmm Not where I wanna be with a stop order. Also... October is coming... Puts are safer
freedomschool 4 years ago
So what is to keep the "market makers" from shaking the market down to the puts and then sucking in all the low prices?
colihondro 4 years ago
Nothing! That's why it's VITAL to cover your ASSets with a legal, enforceable contract. The put option guarantees the lowest exit price... "STOP" orders leave you as prey to the MM's.
freedomschool 4 years ago