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Saturday, April 07, 2007

Option

Tim Knight had a detail description on the process of how he make a option order in On Options.

There're several steps:

  1. find a stock via TA
    He use a 17 months "W" reversal chart as a call option candidate.
  2. look for a recent lowest price as stop price
  3. a strike price that
    • "a little in the money"
    • "two or three months down the road"
    • "beefy volume and open interest"
    • "a bid/ask spread that's not big"

I think it will be more perfect to add rules like this:Find s stock via Morningstar video.

I guess there're many mutual fund managers take a look at this site frequently. It's obvious that sometimes stock prices were moved by the reference video, specially when the stock price were under 50 day  but over 200 day average. The best examples recently were VIMC and JNJ.

One Response to "Option":
Coach - 6/4/2007 10:36:20 AM
Will go check that blog ... cheers




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