Options

Well, I think I may be coverting my stock positions to option positions. For now I will run both as I see how the options trades work out. Using options forces me to take a closer look at the pricing and nature of the option, decide on a strike price, expiry date and determine if the option is viable to trade based on the charting that I have been doing. It seems to get me more in tune with the underlying stock as I have to do a LITTLE bit more homework before placing the trade.

All of this slows down my trading, which is a good thing. I am forced to take more time in setting up and reviewing all of the factors that go into deciding to trade or not. This extra time has me looking closer at sector rotation again. While I think that the nature of my stock selection sort of handles this automatically for me I would like to use the rotation strategy more aggressively to make it work as one more factor in pushing the odds into my favour.

The pricing of the options is a factor, obviously. I would trade 100 share lots all the time but find that my capital dissappears quickly, trades entered and not filled still count as buying power used up. Options will run between $5 and $15 for stocks between $15 and $50. Rather than filling up my account with orders this lets me sit in a bit more cash while already having my orders in place. The only possible downside is the inability to buy 1/2 contract sizes, minor problem.

I currently have three option positions, 6 stock positions and a few of each order in place. I think I will let this settle for a bit and see where it all goes now.

Jeff.