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Sean HymanSean Hyman
Keymaster
Post count: 7046

You’ll have to keep LI long-term targets and options in two separate categories in your mind. Why? Options are timely and erode over time. The stock won’t.

With an LI stock, all we have to do is have the price trend higher than our average breakeven price and we make money.

With options, you have to factor in price direction, volatility and time decay.

So, to that I’d say….if you made 21% on a stock you’d be happy. So I’d say to be thrilled with 21% on an option too. That’s a general thought.

With options, since they’re much more timely, I’d suggest watching them on daily and hourly charts.

When profits should be taken on options is the million dollar question. Why? Because no one will ever consistently squeeze out all of the gains that could be made in an option and if they wait one moment too long, they can give back a ton of their gains or even all of their gains.

So, the name of the game there to buy like I teach in my options book and close out on a nice surge higher and take good profits while you know that you have them. Some surges higher will be stronger and faster than others, producing higher % gains than others.

Also, IBM has a dividend coming up. On the ex-dividend, that can weigh on the stock price temporarily and weigh even more on options prices on that stock. Ex-dividend is tomorrow. Not sure what broker you have, but if you have Think or Swim’s desktop charts, it will show those at the bottom of the chart. They’re very handy reminders.