Knowledgebase
What price should I enter an option trade at?
Posted by Charlie Trader on 29 April 2018 02:19 PM

If you are going directional, Long Calll, Long Put, Pre or Post Earnings Strategies you must go deep in the money, at least 3 months until expiration, so that you do not get punished on time decay / implied volatility.

If you go deep ITM there is less scope for manipulation and then you can make the option order conditional on the stock price reaching X. That way you can set up the trade in advance.

You can also enter a limit price, which you can determine by the 'Fair Value' in the OptionEasy Pricer tool.

 

If you are going non-directional, with a Straddle you expect a large move, but in either direction; you will be at the money, at least 3 months to expiration for the reasons above.


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