Closing Out Option Trades for Triple-Digit Profits
Chris Johnson and Jon Lewis, August 21, 2009
Free Trading Guides
-
Setting Price Targets
So, how do you set these targets? Typically, we set a target price for the underlying stock and then calculate the potential option returns of such a move using an options pricing calculator (easily found online).
We generally operate in an environment where our upside, or profit, target is defined by a stock that will move enough to yield a 100% return (or more) on our option. This is one of the ways that we select our option for the trade (but that's a discussion for another day).
More By This Expert
Whet Your Appetite for Kroger Puts
Grocer Kroger (KR) looks vulnerable as it heads into earnings. Find out why.
Big Lots About to Make a Big Move
If history is any guide, Big Lots (BIG) should make a substantial move next week. Find out which direction we think it's headed.
Express Scripts Has the Right Medicine
Pharmacy management services provider Express Scripts (ESRX) should beat earnings estimates and continue its move higher.
We think the Street has it all backward when it comes to these four stocks. Find out how to position yourself on the right side of these trades.
A Stock That Wishes Tiger Hadn't Been Let Out of the Bag?
One of videogame maker Electronic Arts' (ERTS) greatest strengths has turned into a major problem for the company -- its sponsorship of Tiger Woods. And that's not all that's wrong with the stock.
