Weekend Update: FAQs


For every member that emails in a question there are probably 10 others that have the same question but haven't asked. The FAQs below should be helpful for everyone. 

FAQ: Some options go up 35-40% so fast that by the time I can sell them they've already fallen back down. How do I get out where I want to without having to watch my options all day? 

A: Once you have purchased the option in your account, take that the purchase price and multiply it by 1.35 (+35%) or 1.40 (+40%), or whatever your initial profit-taking target is, then place a GTC sell order (good-until-canceled) at that price. When the option trades there, your option will be immediately sold without any further input. Try to leave some on as your mother ticket.  if you buy 4 contracts, leave 1 on for further gains, 8 contracts leave 2 on, 12 contracts, leave 3 on, etc. Keep tabs on those remaining contracts daily, with a mental stop at break-even. Once they reach triple digits move that mental stop way, way up. 

FAQ: What should I do if I can't buy the option at the price in the trade alert? 

A: Buy it anyway. The price in the alert is simply the price at which the option is trading as the alert gets created. I also have been known to inadvertently put down the wrong price.  It is the strike and expiration described in the alert that matters, not the "around price" in parenthesis

FAQ: Is it still advised to "take all trades?"

A: This leads us into the subject matter of the next question, but let's address it here first. It is not necessary to take every trade. Every trade that goes out has the same probability of success and any other. You can take them all, or any subset, but certainly not less than 3, preferably not less than 5. 

FAQ: Doesn't taking quick profits get you out of your trades too soon, sometimes  leaving few if any positions open? Even though the option tables show a lot of trades, most all of them have hit their targets. 

A: There are new trades coming every week and I really am preferring quality over quantity. Right now, counting all of the June and July expiration trades, every one has reached one target or the other. If you closed out your position completely on each one you have no open positions going into Monday. Two solutions: 

(1) Always leave some options open after initial profit-taking, holding for further gains. Use a break-even (on initial entry) stop and move that stop up as the option goes up. 

(2) Treat "Repeat" signals as entirely new stand-alone signals, with a full monetary allocation that you would accord any new signal. The chart below is of a new addition to the PRO basket, Micron Technology (MU). It had 3 sells all within the month of May, about two weeks apart. The first two signals would have been big winners. Depending on the option expiration (we were not trading MU at the time) these signals could have overlapped. What to do? If you have extra cash to put to work take the repeat signals as new signals, or if the original option is on the verge of expiring, the new signal is an opportunity to rollover the position into the next expiration. 

(3) There are two other Blue Line Services that generate more and different trades, the Premium and PRO services. If the Standard service is not active enough, try one of these more active services. The higher subscription fees for those two services is a drop in the bucket compared to what you could be making.




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Look at the column labeled, "Best Return." It's unrealistic to assume you are going to get out at top tick...but how about 1/2 of top tick? The potential is there on every one of these trades and no rule-based strategy is going to make the most of what is there. The emails I am getting from PRO members support this observation. A little creatively could beat the pants of what the tables are showing.  



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