Recently, an All Star Options subscriber wrote to me asking about some hard “rules” that I follow in entering and managing trades. The assumption was that I have some rules that I absolutely stick to which apply to every trade. As a guy who loves following rules when it comes to certain types of trading, I’m sorry to report that options trading isn’t so cut-and-dried. There is nuance to position selection and management. It’s much more art than science.
So while there are no one-size fits all answers to any questions about strategy selection, strike selection, and position management — I’ve developed a few guidelines for myself that I rely on regularly as I ply my craft in the options market. [Read more…]