Funny day today.

I started the day with a mixed open followed by most of my positions heading up...the stock prices anyway as the option prices don't move that fast when they are way out of the money.

As of this moment every single stock, with one exception, that represents the options I have positions for has started moving up, from yesterday's close anyway. DPS was the worst as it had dropped $2 off the start and is now back in the 50 cent under area...not a bad recovery. The worst about that is it is a new trade...BAH!

The S&P is up overall and has surpassed yesterday's high...so we have a higher high and a higher low... perhaps this is the re-assertion of the uptrend for this year as the S&P comes off of the low trading range and crosses above the 50sma...yesterday's resistance and today's support.

Whatever.

I now have 7 option positions that are either at breakeven or positive which is better than them all being in the red. I'll run the numbers after the market closes today and see how I am making out.

I placed an Optioneer trade last night for today's trading, I doubt the order will get filled.

When placing a trade I choose the market, the style of trade and the size of the order. Then I decide how much I am willing to bend in order to have the trade filled. I am aiming for 1.9 points as a minimum and, as a full point is worth $250, that makes a trade target of $397 after commissions. If I allow 0.1 points I may give up $25 in profits to give the broker more room to move, basically it is a limit order and I allow more limit room, or a lower profit target.

At 1.9 points I will allow no room, or leniency as they call it, but as the point target goes up I will allow more room according to the difference in my target.

1.9 = none
2.0 = 0.1 or none depending on the market and my desire to make the trade
2.1 = 0.1
2.2 = 0.2
2.3 = 0.3
2.4 = 0.4

The largest I have seen is 2.4, which is $522 target. Sometimes the orders are filled at the target or higher, sometimes lower and sometimes not at all due to being too far out from the allowed leniency.

In my testing I saw the average target was $414 so the tendency is toward the smaller side. Depending on how often I get filled with this method I may have to lower my minimum target. The interesting thing about that is that I can also lower the timeframe that I am willing to be in a trade.

For example, today's target puts me at $397 over the next 45 days....$8.82 per day. I could choose to take the same target but not until the time to expiry is down to 35 days or $11.34 per day. That increases the time return on my money and keeps me in a shorter trade, which is actually safer as the market would have to move faster and harder in order to cause me to lose any of the target profit.

The other difference in the time trades is the annualized return. the 45 day trade vs the 35 day trade would be 70% vs 90%. So if I always traded in the 35 day range I could force my cash to work harder for me as I could turn it around quicker. I suspect that I will have to allow a greater leniency as the time to expiry shortens in order to accommodate the greater volatility as the expiry approaches. This may offset the advantage. Having said that, I will always take the largest return and the shortest timeframe.

All this is nothing proprietary, this is just the nature of options and strangle strategies, time is very important.

Jeff.