Why I trade Options

Risk Reduction, Risk Reduction, Risk Reduction. The biggest killer of a MR trade is large outlier losses. I had a position on AIG looking for some MR….check out what happened:

I initiated a bearish calendar spread on Wednesday with the stock near 34. Literally within a few minutes, emphasis on MINUTES, the stock was close to $38. The next day we gapped and traded close to $50! My loss on a bearish position was only $9 per spread. Amazing, and I did the right thing by hitting a bid immediately on the open when an outlier event happened, many times in all honesty I sometimes hold out for a reversal.

A little while later on the same trading day I closed out another position on QCOM for a small 3% gain.

Check out my performance in the Discretionary Page to the right.


~ by largecaptrader on August 27, 2009.

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