Opening Positions:
Opening positions are always traded in equal contract sizes on both sides. So when we place the opening Straddle (or the more politically correct "Strangle") order, we are going to put in an equal amount for both sides.
Let us look at a real example from one of our previous alerts:
On 7/15/08, the following alert was given...
Opening Position
This recommendation has passed through stage 3 and should be entered the following business day:
1. Sell to open:
LEH AUG 5 PUT (.LYHTA) for $0.60 or better
LEH AUG 25 CALL (.LYHHE) for $0.45 or better
This will create a stragle for LEH AUG 5 PUT / AUG 25 CALL for $1.05 net credit
Once executed, we will put in the following orders which will create spreads if they are executed:
Buy to open (.LYHTU) at market, contingent upon LEH LAST LESS THAN $6.50 G.T.C.
Buy to open (.LYHHR) at market, contingent upon LEH LAST GREATER THAN $24.00 G.T.C.
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To place this trade in our optionsXpress account we would do the following:
1. Click "Xspreads" under the "Trade" Tab.
2. Click "Straddle" in the order ticket screen.
3. Enter the trade as shown, and click preview.
Follow through until you get to the confirmation screen, and you are done.
Then, we must place the contingent orders. These orders must be placed individually as follows:
1. Go to the "Trade" tab again, but this time you will click "Options".
2. Click "Contingent" in the available tabs.
3. Enter the trade as shown, and click preview. Please note all the areas where action is necessary.
4. Now we would perform the exact steps to place the other contingent order. Please rember to follow through until you get to the confirmation screen, and you are done.
Congratulations, you can now enter an Opening Position and place a Contingent Order.
Closing Position
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