For the first time in a while I did some options trading this week. Here is my process: Find a chart that looks good. Formulate a hypothesis. Purchase option at the money or in the money two months out at the very least. Set intelligent stops to limit losses. Wait and see.
On Tuesday of this week I thought the chart for ABX looked good for shorting. My hypothesis was that ABX would fall from $38-39 to about $32 in about a week or so. I purchased two ATM puts on Wednesday. I set my stops at $39.69, the high for past couple of days. Then I did not have to wait long. ABX fell %14.53 in a day! I sold one option when ABX was down %10 and the other option when ABX was down %14.
Totally awesome
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