Intel Corporation (NASDAQ:INTC)Date Published: 2017-02-07
Written by Ophir Gottlieb
Intel Corporation, Short Puts and Stop Losses
Selling a put during a bull market is usually one of the best performing trades but it wasn't for Intel Intel Corporation (NASDAQ:INTC) -- until it was fixed. That is what everyone else knows -- and this is what they do not.
If we look at selling the 25 delta (out of the money) put in Intel every week for three-years we got these results:
Yep, a 8.8% loss, even though we are in the middle of a bull market and Intel is a pretty low risk tech stock. Everyone else who has looked at this strategy has walked away believing it's a loser -- and that's great because that means those of us using less luck and more analysis have a window.
Here is how that exact same strategy in Intel Corporation (NASDAQ:INTC) looked, but we used a 50% stop loss -- that is, every time the weekly option hit a 50% loss, we simply closed it, and waited for the next week to trade.
Yeah, that's not a typo. A 8.8% losing trade in Intel Corporation puts turned into a 105% winning trade by using stops appropriately. And this isn't cherry picking. If we did this same side-by-side comparison for short puts in Intel Corporation (NASDAQ:INTC) for two-years using weekly options, we got these results:
Now this article actually isn't about evangelizing the use of stop losses -- not at all. This article is a window into the world of successful option trading. This is why...
We've just seen an explicit demonstration of the fact that there's a lot less 'luck' and a lot more planning in successful option trading than many people realize. Here is a quick 4-minute demonstration video that will change your option trading life forever:
Tap here to see the demo movie
The author has no position in Intel Corporation (NASDAQ:INTC) at the time of this writing.
Thanks for reading, friends.
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