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| Darn good question Pf82.
Every day I look at the option prices and ask myself the same question. How can I use options to protect risk without throwing good money out the door with extremely high priced options?
So far the answer has come to me within a few minutes of market open. Doing nothing was the best thing.
For example, today a Dec $6.30 put is close to 70 cents. So the market has to go down 70 cents before I get any protection beyond the cost of the put. If the market goes up, I’m going to lose money on the put and probably give away half the rally to the guy that sold the put.
Normally, I would buy a put and sell a call to cheapen up the downside protection in exchange for capping my price. I refuse to sell calls in this market.
It feels like a run away freight train. It will stop sometime. | |
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What are you doing to protect these prices
