Recently, some of you have asked us to detail how we place our trades. We realize now, that we should have detailed this before, but we are trying to improve this site through time. We hope that these articles will dispel any confusion as to how we put in all of our orders.

With this trading method we strive to keep a sense of balance throughout our trading. Our trading philosophy remains neutral. So whatever happens on one side of the equation needs to be balanced on the other side.

Remember, we are essentially playing both sides of the market. We do not care if the stock makes a move in one direction or the other, as long as it stays within our "comfort range". We only sell "out of the money" strangles, because it is a neutral play.

We put in contingent orders as a hedge against the opening positions moving out of our favor. This is always recommended, because no matter how much research is done, and how sure we are that the position will work, the market can be "unpredictable" sometimes.

Adjustments are made from time to time as new information presents itself. There may have been a change in some fundamental or technical aspect of one of our positions, or we may have another issue which has to be addressed.

Closing positions are recommended to either book a profit, or to stop a loss. We may recommend you close a profitable position, but you have the option not to to do so if you so choose. We will recommend closing a spread position when it breaks even, or turns profitable. We do not recommend ignoring this alert.

Here are some explanations of the specific terms that we use:

Call: A contract that gives the buyer the right, but not the obligation, to purchase a set amount of stock (usually 100 shares) at a predetermined price anytime before the contract expires.
Put: A contract that gives the holder the right, but not the obligation, to sell a stock at a set price for limited period of time.
Strike Price: Also known as Exercise Price. The price, specified by the option contract, at which the holder can buy or sell the underlying stock.
Sell To Open: An order entered to establish a new short position.
Buy To Open: An order entered to establish a new long position.
Sell To Close: An order entered to close a long position.
Buy To Close: An order entered to close a short position.
Straddle/Strangle: An option spread strategy involving a short put and a short call with the same (Straddle) or different (Strangle) strikes but the same expiration. For our purposes, there is little difference between these two. Technically, we sell "Strangles". But in order to place an order, you must click "Straddle". (Go figure)
Bull Call Spread: Buying a call with a lower strike to offset the call we sold with a higher strike.
Bull Put Spread: Buying a put with a higher strike to offset the Put we sold with a lower strike.
At Market: Any trade executed at the prevailing bid or offer.
Net Credit: A trade which will increase the cash balance of your account.
Net Debit: A trade which will decrease the cash balance of your account.
Contingent Order: Orders which will trigger based on a preset condition.
LAST: The most recent order fill on a particular security.
G.T.C.: Good until Cancelled. An order to execute a trade that remains open until the trade is completed, the customer cancels the order, or the underlying option has expired. Unlike a day order, which expires at the end of a trading day, a G.T.C. order will remain in effect until it is filled or cancelled.

Now that we have gotten that out of the way...

The following are examples of actual trades, and are specific alerts which we have given to our members and the screen shots which explain how we place these orders:

Opening Positions

Closing Positions

We will use the screen shots from our brokerage account, to illustrate these orders. We do not reccomend any specific brokerage house. The screenshots are simply for demonstration!