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New Trade – BUY NOV14 CALLS on GLW

Corning Inc. (GLW) received an upgrade today and rallied in the morning. That put this stock out from a quite long squeeze into a rally. It was a first day when my indicator showed and entry point. So I decided to scale in another call trade out of my 3 planned trades.

I planned to take three trades to try my new long call strategy. I am risking $240 and my potential profit is unlimited.

You can review my previous trades here.

These trades are about my new indicators I put into my trading tools recently. I tested them in paper account for a few months and they seem to work well and generate nice signals. This can help me to use long call or put strategies and increase my gains. I can also abandon this strategy later if it won’t satisfy my expectations.

So this trade, with the previous two trades are my test trades.

When buying options, you typically want as long option as possible to avoid time decay. If you buy 150 or more days to expiration option (be it a call or put), the time decay is very slow and stock movement can change the price of the option. If you buy 56 or less days to expiration option, the time decay will eat you alive. For short time options, you want to be a seller, and you want to be buying long time options.

That’s why I bought November contract, hoping this stock will shoot up and I will close with profit. Although the end of today’s trading with GLW was horrible and the stock returned all morning gains.

Trade Detail

BTO 1 GLW NOV14 22 CALL @ $1.30

 

Max Profit unlimited There is no max profit on calls. In theory, the stock could keep going up forever. But remember, your profit is limited to the move the stock can make before the call option expires. Profit occurs anywhere above 23.30. With 1 contract, you will profit $100 per point GLW is over 23.30.
Max Loss $130 A call option gives you the right to buy the stock at the strike price. If the stock is below the strike price on expiration day, it will be worthless. So, max loss occurs if GLW is $22 or less on expiration day, which is November 21 for this option.

 
 

 
 

What do you think, will GLW spike up or there is no potential at all?

Happy Trading
 





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