Stock Option Trading Strategy – Long energy stock call options, waiting to buy a dip.

May 21, 2007
Author: Peter Stolcers, Founder of OneOption

The opening was fairly predictable today. Per normal the market digested and M&A news from the weekend and that gave prices and early boost. The overseas markets were fairly quiet with a bullish bias and currently we are a point away from a new all-time high on the S&P 500. Tech stocks look particularly strong today and that's sector has lagged. The news front is slow today and I expect prices to grind higher and make a new closing high. That will give reporters something to talk about. If that scenario doesn't play out, it will later this week. There might be a little expiration related hangover today given last week's run up. However, I think that was resolved shortly after the open. I will gradually start establishing bull put spreads if we don't get a market pullback this week. I want to distance myself from the action and this strategy will allow me to do that. If we get a pullback that successfully tests support, I will buy calls on stocks I like. I will continue to hold my energy stock call options. This sector has a great deal of strength and I don't believe the macro conditions will change anytime soon. Consequently, these stocks should hold up well and they have already been able to do that during recent down days.image

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