The people have spoken. You have questions. I have answers. So for today, I would like to share with you some of the email questions that I have received.
Q: Loved you when you were with the Phils, especially that big home run in the playoffs against Atlanta. I love "
Nails on the Numbers" even more! But I have a question about your "next buy" price target. Exactly what should I do once the stock hits that target? Buy more of the option at whatever the current ask price is? And how often do you act on these -- every day, multiple times a day? Thanks, and keep up the great work!
-- Steve from Somerset, N.Y.
A: Steve, my days in Philly were a lot of fun. Thanks for remembering how we pulled out that fifth game. We needed it.
As for your question, let me explain. When a stock hits its "next buy" level as outlined in my newsletter, you should place a market order for the options. However, you need to be sure that by doing so, it improves your position (i.e., you are lowering the average purchase price you paid for all your contracts). If you don't improve your position, you are not achieving the goal of averaging down and are just throwing more money into a position that is going down without reaping the reward. So make sure that before you complete the trade, it does achieve that goal.
Lastly, the scorecard (you can find this under the "Recent Plays" tab on my site), which is the key to following my rebuys, is updated once a day. If I am making further adjustments, I let the readers know.
Lenny Dykstra
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