Suggested Exit

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.

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