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Suggested Entry Price.
At the time a signal is issued, we
state a "Suggested Entry Price". When an option trades at or below
that price, we buy it.
Once we issue a "Suggested Entry Price", we do not change it under
any circumstances since any changes would also require a change to
our "Suggested Exit Price", altering the signal completely.
If our analysis shows that it
should be changed, we will cancel it and issue a new signal.
We will notify all our members
about such changes by e-mail and post the new "Signal" on the
current signal page.
Question: Can a trader use your signals to
trade options with expiration dates that differ from the one you
suggest?
Yes. A trader may choose to
trade options with a later expiry date (thereby reducing the risk,
but potentially also lowering the return), or you may decide to
choose options with an earlier expiration date (which will increase
the trading risk, but also the potential profits). In this case to
follow our signal a trader has to change "Suggested Entry Price". There
is no exact formula on how to calculate it since options with
different expiry dates have different volatilities.
Important:
We do not recommend trading options that expire in less than three weeks. Our system was
developed specifically for option trades with an expiration date of
at least 2 to 3 months We do not want to encourage traders to invest
the money into risky (short-term) option plays that have a high
risk of expiring worthless.
Entry Price.
The entry price is defined as the
actual price of an option at the moment a trade is opened.
The entry price is usually equal to
the "Suggested Entry Price". It could, however, be substantially
lower when a trade is opened when the market opens significantly
below the "Suggested Entry Price".
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