Lenny,I really enjoy your column andinvesting system. One question Ihave relates to the second and thirdbuy prices you set for the calls. Whatmetrics or rules do you use to selectthese prices -- technical, fundamental orsome combination of the two? When setting the next buy level for a stock, I look at technical information. I take into consideration the current trading value of the stock, as well as the current average value of my DITM calls, how many positions I own and how long before expiration. Also weighing in will be the 52-week low, and most importantly the support levels. I don't have a magic formula where I plug in a few numbers and out pops the new level, as many variables are considered and weighed, and they change with each trade.
Lenny, I have been investing in stocks for several years,following a buy-hold strategy. It has served mewell, but I am looking to generate continuousincome for the portfolio using options.Could you provide some insight into the "selltriggers" you are using with your DITM strategy? I am looking for insight on when to sellthe options. Any advice you provide is appreciated. With my DITM calls strategy, my sell trigger is very easy. Initially I will set my "good-till-canceled" order to automatically sell my open positions when it reaches $1 higher than the purchase price, locking in consistent $1,000 wins. My strategy is not about home runs; it is about base hits. In baseball, consistent hits will help you outscore the competition more often than trying to aim for the fences every time. However, the longer a position remains open, the more the trade will cost you in potential profits. Therefore, when a trade remains open for a while, I will adjust my GTC sell order down to exit the trade quicker and move my cash into a position that has the potential for a quicker turnover. With investing of any type, it's not just how much you make on each trade that is important, but how long it takes to earn the profits.