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Thursday, July 30, 2009

7 weeks out and the option on the move...


There are 31 trading days left and the stock is still well above the strike price. The interesting thing is that the option's time value of the option is actually on the decline and actually below what I paid for it even though the stock has rocketed past the strike price of the stock. That is not to say that the option itself is below, just the time value of the option is. This didn't happen with the previous trade (HGSI) until late in the strike month. But the time value was higher when this trade was originated so maybe this is the normal level.

There will be new product info in the next two months or so I have read on other blogs/posts. The chart is a little unpredictable give the jump in the last week. But it looks like the trade is still in very good shape.

This type of trade is what the account is looking for. If a stock can be found with an unusually large time value attached to its options, the account will look to exploit that. Stocks like this not only provide an indication of bullish sentiment, but they also provide the seller with an added risk premium not usually seen in other stocks. This added premium received is where the account will create its revenue and quicken its size overall.

-As always, I do not fully divulge information on open trades. When the trade ends, I will give out the rest of the details (stock name, price purchased, call purchased, news on company/ETF, chart info) that sort of thing. Please feel free to ask questions and I will answer them the best I can without endangering the trade.

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