The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone, Kirk here again at Option Alpha and welcome back to the daily call. Today, we are going to be talking about laddering option trades and specifically, frequency and pricing guidelines that you might be able to use. First, let's talk about what our laddered option trades, what’s the concept that we often refer to. Basically what it means is that we're not going to enter one big stinky position around a strike price and plant our flag in the sand and say, “This is our position for the next month.” Instead, what we’ll do is if we’re going to enter say 10 contracts, we’ll try to split that up into a couple of different entries, maybe three different sets of trades, 334, something like that where we start averaging around the security, start averaging down or up as the security starts moving. For example: If a stock is trading at $100 and we want to do some straddles, we might sell three straddles at 100 then wait for the stock to move. If it does move up to say 103, we’ll sell another three straddles