Shippers Trade

• stevenplace
• November 18th, 2009

Since this was a short term trade that has completed, I’m going to open this page up to the public to show how I structure my trades. Great opex trade!

GNK

The stock is coming into a previous level of supply (resistance). If we got short here and put our stop above that level (30), then our total risk wold be .89.

My initial target for the trade would be 26. The profit target from this level would give us 3.11.

So risk reward on a straight short would be 3.11/.89 = 3.5R — that’s a good expectancy.

In terms of option strategies I am using this strategy:

Sell to open -5 GNK Nov 30 Calls for .40

That trade gives us this risk profile:

So with a stop of 30.01, our total risk is 200. Our total potential reward is 200. Also, the theta in the position causes our directional risk to go down with the name.

This trade is for the 40k.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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