Wednesday, June 20, 2012

How to Save an Options Trade

I figured out a way to possibly save an options investment that has gone bad.  If you buy more of the same options (same strike price and calendar date) when it has gone down to its lows, you can realize the profit on the way up.  Case in point: if you bought 3 options contracts of AT&T at $0.18 then as of today (6-20-12) you would be at a loss because they went down to $0.12.  However, if you buy 15 options contracts of the same strike price at the new low of $0.12, you can realize a profit once you get back to break even of $0.18.  As with any trade make sure you calculate the commission costs ON BOTH SIDES OF YOUR TRADE when you do your break even analysis.  Always go with the total cost amount not just the face value of the option. 

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