Just a quick note today to talk a little bit about Holiday Option Trading Risk Management.
First off let me say, Happy Holidays to all of you everywhere! I hope it brings good times for you and your family.
When option trading during this holiday period, roughly the week before Christmas through the end of the year, you can see a lot of strange moves in the market. Many times traders will be trying to sell for tax loss reasons to offset gains and you will also see mutual funds buying stocks that they want to be in for the fourth quarter, and of course, selling stocks that they don’t want to be in for the new year.
During this time, there is usually lower liquidity in the market. This means that the bid ask will be wider and the market makers will not give in as much on pricing. If you are going to trade, not only do you want to trade smaller, but also stick close to the midpoint between the bid and ask with your fills and don’t give in as much. It’s not worth giving up too much to get into a trade at this time of year. If you don’t get filled there’s always next year, LOL. So step back, make your plan for next year, and enjoy a few days of little or no trading. This is a great time to work on what you did wrong in 2014 and what you want to improve on and 2015 with your options trading. A Mentoring program will help you with setting realistic trading goals and managing your risk. While you are relaxing this Christmas, think about joining the GOLD Mentoring program. Dan is offering the GOLD package at the lowest price of the year, but the offer expires when the ball drops!
Happy Holidays to all!
Mark Fenton- Senior Mentor