Suggested Exit and Exit Prices.

Suggested Exit Price.

We do not issue signals to indicate when a purchased option should be sold. Instead, at the time a signal is issued, we state a "Suggested Exit Price". When an option trades at or below that price, we buy it to cover our short position.

Depending on the current market situation, we may change a "Suggested Exit Price" after a trade has been opened. For example, if the market goes against our trade, we may raise the exit price in order to reduce losses. By the same token, when the market continues to move in our favor, we may lower a "Suggested Exit Price" in order to increase profits.

We notify all our members about such changes by e-mail and post the new "Suggested Exit Price" on the current signal page.

Question: To close a trade, should a trader always follow your "Suggested Exit Price"?

Not necessarily: If a trader follows our signals, he/she can always choose an exit price that better suits trader's risk tolerance and trading strategy. If a trader has other trading indicators that show the market could continue to move in his/her favor, a trader may decide to choose a lower exit price and thereby increase the probability of achieving larger profits.

Important:

We generally don't recommend setting stop-losses or using limit orders based on our "Suggested Exit Price". The market has a habit of hitting stop-loss orders simply because they exist. If enough stop-loss orders are clustered at a specific price, the market will not hesitate to take them out.

Exit Price.

The exit price is defined as the actual price of an option at the moment a trade is closed.

The exit price is usually equal to the "Suggested Exit Price". It could, however, be substantially lower when a trade is closed when the market opens significantly below the "Suggested Exit Price".