S&C Magazine Current Contents Q & A
THE OPENING PLAY
- Details
- Parent Category: Q & A
- Category: Aspects Of Trading
- Written by Don Bright
I was wondering if you could help with a couple of things. You have written about your opening play a couple of times. Now that we seem to have 24-hour trading, with electronic communications networks (ECNs) and so on, is that play still working? Are there any major changes you can address that I may not know about? In addition, if you have time and space, could you please explain again how you see the end-of-day shares that are being bought or sold ahead of time? How can I get this information? Is this a special privilege? Is it something that has to be paid for? Thank you. — eqtyguy2008
MATH ASSIGNMENT
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- Parent Category: Q & A
- Category: Explore Your Options
- Written by Tom Gentile
With assignment of a short call prior to expiration a possibility on equity options, when should I expect this type of risk?
Equity options fall under the category of being American style, wherein and as stated there is the risk of assignment for those holding short contracts, either a call or a put. With regards to the call, the good news is that an early assignment is typically very clear as to when it might occur.
A BROKEN BUTTERFLY?
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- Parent Category: Q & A
- Category: Explore Your Options
- Written by Tom Gentile
Being relatively new to options, I’m paper trading various strategies until I thoroughly understand them and commit real capital. One position that’s stumped me is a long butterfly using two contracts (2 x (4) x 2) purchased for $1.00. The stock proceeded to dive shortly thereafter and much to my surprise, instead of a maximum loss I thought was contained to $200, the position was down more than $1,200! Can you help explain this to a slightly disconcerted newbie?
LEAPS OF FAITH
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- Parent Category: Q & A
- Category: Explore Your Options
- Written by Tom Gentile
Following Netflix’s late October 2011 earnings disappointment, shares cemented the stock’s out-of-favor position with growth traders. But with NFLX’s rapid drop in excess of 70% from its highs and the company still the dominant player in the to-your-doorstep or streaming video market, what are your thoughts on buying a LEAPS call as a way to position for some upside?
It’s not my place to give recommendations on a particular stock. What I can say is that despite your prognosis of shares, a long call strategy with a long-term contract needs to assess liquidity and implied volatility.
LIMITS TO LIMIT ORDERS
- Details
- Parent Category: Q & A
- Category: Futures For You
- Written by Carley Garner
When is it appropriate to use a limit order to enter a market, and when should they be avoided?
As a reminder, a limit order is one in which execution is permissible only if it can be done at a price named by the trader, or at a better price. You might hear this order type referred to as an “or better” order.
