Options Experiment...

[MistakesWereMade]

I've a call option for TKMR $20 for march 20/15 on Investopedia.

Took a huge beating from it only about 1.7k left from the 4.5k I invested.

Do you suggest I close it out now and cut my losses or should I hold til another month or 2 when time value really starts kicking in? What is the optimal strategy here?

 

[Dong Mu]

you buy or sell option? time value give you kicking if you buy. if you sell sit tight and watch counterparty poo. if you lost already then you buy not sell. in china we say, muppet buy premium, cool cat sell. sell now. not cool cat but get some money back. muppet.

 

[MistakesWereMade]

you buy or sell option? time value give you kicking if you buy. if you sell sit tight and watch counterparty poo. if you lost already then you buy not sell. in china we say, muppet buy premium, cool cat sell. sell now. not cool cat but get some money back. muppet.

My heritage might be the same yet I'm having a really hard time understanding that sorry.

 

[ACstudio]

My heritage might be the same yet I'm having a really hard time understanding that sorry.

Means never buy premium outright. Always sell...let the other guy eat the decay...as time always moves forward.

The best strategy now is to sell front month calls against it and collect as much premium between now and then as possible. Sell the 1st out of the money calls for NOV and roll every month for even or for credit as close to out of the money as possible. In about 4 rolls you will own the back month calls outright and have a free ride to the upside or more rolls for profit.

Doing this will also lower your buying power reduction considerably. You will only be reduced by the distance between the strikes minus the credit received.

ps....buying power reduction as opposed to selling naked calls quite obviously.

 

[gerryg]

I've a call option for TKMR $20 for march 20/15 on Investopedia.

Took a huge beating from it only about 1.7k left from the 4.5k I invested.

Do you suggest I close it out now and cut my losses or should I hold til another month or 2 when time value really starts kicking in? What is the optimal strategy here?

:whistling Money management is gone away..

Everytime before entering a trade calculate expected profits and tolerable losses. This is the sticking point for controlling any trade