I thought we were going to get a firm recommendation on WMT as a follow up to last night’s video in which you discussed either a Jan 75 call or the Nov 75 call?
In Dan’s morning post in the forum, he commented on WMT specifically, and said he wasn’t taking that trade today because the stock was pulling back. He wanted to wait for a better entry.
$CLF Looks like good basing pattern, Price broke above down trend line (6/21 – 10/11 highs). Price just above 50dMA, TSV moving up, and recent green BOP. Concern is low Vol yesterday, below 21 dMA of Volume.
Dan’s trade was to buy CLF November $42 calls, paying $2.95 or less for them.
Once you have the position opened, you would set a stop loss order to sell the calls if the price dropped below $2.21 … thus limiting your downside risk on the trade to $0.74 ($74.00 per contract). This is in line with Dan’s standard rule of thumb regarding options trades – take no loss greater than 25% on any option position.
Assuming the trade starts to work in our favor (and this morning it certainly is already), then we will adjust the stop level upward at some point, guaranteeing that we do no worse than break even, should the stock suddenly reverse course and start to sell off.
I thought we were going to get a firm recommendation on WMT as a follow up to last night’s video in which you discussed either a Jan 75 call or the Nov 75 call?
In Dan’s morning post in the forum, he commented on WMT specifically, and said he wasn’t taking that trade today because the stock was pulling back. He wanted to wait for a better entry.
– Tim
$CLF Looks like good basing pattern, Price broke above down trend line (6/21 – 10/11 highs). Price just above 50dMA, TSV moving up, and recent green BOP. Concern is low Vol yesterday, below 21 dMA of Volume.
What Stop:2.1Stop Limit(stop at 2:21) mean. Can some explain. Thanks
Sure …
Dan’s trade was to buy CLF November $42 calls, paying $2.95 or less for them.
Once you have the position opened, you would set a stop loss order to sell the calls if the price dropped below $2.21 … thus limiting your downside risk on the trade to $0.74 ($74.00 per contract). This is in line with Dan’s standard rule of thumb regarding options trades – take no loss greater than 25% on any option position.
Assuming the trade starts to work in our favor (and this morning it certainly is already), then we will adjust the stop level upward at some point, guaranteeing that we do no worse than break even, should the stock suddenly reverse course and start to sell off.
I hope that clears things up some.
– Tim