O'Reilly logo

Keene on the Market: Trade to Win Using Unusual Options Activity, Volatility, and Earnings by Andrew Keene

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

CHAPTER 16

Managing Trades on Expiration

My primary trading goal is simple: to make money. I am not trading on a day-to-day basis to make friends, or to make my clearing firm money, or because I enjoy gambling. My goal is to make the most money I can so that I have money to do the other things I enjoy in life, such as volunteering at the Boys & Girls Club and the local soup kitchen, and spending more time with my family. Obviously, I also trade to have fun, but after making money, managing my positions is my second goal. If I do not manage my positions, I can turn a position with small risk into one with huge amounts of risk. I often compare myself to a hedge fund manager, which means that I make every decision: when to get long, short, exit a profitable trade, or pull the ripcord on a trade that is not working. When I am trading and have positions on in up to 60 stocks, it is imperative I manage them properly.

It is vitally important to manage trades properly on expiration. Since I trade so many different strategies, I have to make sure that each trade is managed properly on expiration. I am not a buy-and-hold investor. I put on positions using the OCRRBTT and HIMCRRBTT Trading Plans (see Chapters 18 and 19). When I am managing my risk on expiration my goal is to not have an options position convert to long or short stock on Monday. That means I have to manage all my calls and puts on expiration, with either stock or options, in order to avoid delivery of any stock. Just as in ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required