We do not issue signals to indicate when naked short options should be covered. Instead, at the time a signal is issued, we state a "Suggested Exit" price. This "Suggested Exit" price may be posted as an exact price (i.e., a limit order), or it may be formulated as an "at the market price" (i.e., a market order).
When a short option trades at or below the stated limit price, we buy it back in order to cover the position. If the "Suggested Exit" price is quoted as an "at the market" price, we cover after issuing the new "Suggested Exit" price. If the new "Suggested Exit" price was issued during trading hours, we will cover the position at the market close (If you choose to follow our signals you may cover immediately). If the new "Suggested Exit" price was issued after the market close, we will cover the position at the market open on the following trading day.
Depending on the current market situation, we may change a "Suggested Exit" price after a trading position has been initiated. For example, if the market moves against our trade, we may raise the exit price in order to reduce losses. By the same token, when the market continues to move in our favor, we may lower our "Suggested Exit" price in order to increase profits.
In some situations, mostly when a couple of days left to the traded option's expiration date, we may set "Suggested Exit" price equal to zero. This would mean that we expect the traded options contracts to expire worthless and we intend to let them do it. In the case traded options contracts expire worthless, all the premium received for selling options short is left as a profit and we save on the commissions as no order is executed to close the position.
If there are any such changes, we will notify our members by e-mail, and also post the new "Suggested Exit Price" on the current signal page.
Question: When closing a trade, should I always follow your "Suggested Exit" price?
Not necessarily, if you follow our signals, you can always choose an exit price that better suits your risk tolerance and trading strategy. If you follow other trading indicators that indicate the market may continue to move in your favor, you may decide to choose a lower exit price, thereby increasing the probability of achieving larger profits.
One single winning trade
could pay for the membership for years to come.
: THIS INFORMATION IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE ANY FINANCIAL ADVICE. RISK IS INVOLVED IN ALL STYLES OF MONEY MANAGEMENT. Uncovered options trading involves greater risk than stock trading. You absolutely must make your own decisions before acting on any information obtained from this Website.
The return results represented on the web site are based on the premium received for the selling options short
and do not reflect margin. It is recommended to contact your broker about margin requirements on uncovered options trading before using any information on this web site.
Use our "Trade Calculator
" to recalculate our past performance in relation to the margin requirements, brokerage commissions and other trading related expenses. Past performance is not indicative of future results.