Understanding the Armchair Trader Exit Strategy

July 2, 2017

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Communication with a visitor of Stock Options Made Easy provided greater clarity about why the profits made by members may be more or less than the usually recommended 100% increase. Below is the content of this communication for the benefit of other visitors who may wish to gain a clearer understanding of how the Armchair Trader process works.

I have a quick question regarding your Armchair Trader service.

I understand that past results showed for the Cut-to-the-Chase service only shows potential profits and not actually advised exits, but is the same true for the Armchair Trader? At first I was under the impression that there it's actual results, but then I realized the take profit advised for all the positions is 100%, yet you show some gaining more, and some less (even though green).

Please advise, sincere thanks,

The "Cut-to-the-Chase" service does not have an advised exit and this is at the discretion of the individual trader.

As to the "Armchair" membership the advised exits are close to or at 100%.

However, at times, particularly after an earnings report and then the market opens, the stock option can be at a much higher price than advised -- and will pay at this price. As to being less, the option may reach expiry still in the green but not at 100%, and also, members may be advised at times to sell earlier at a lower price than the original 100%.

Hope this helps clear this up for you!

Best regards,

Ian Harvey

Much clearer, thanks, but please, let me get a little bit more detailed, if I may.

So you send out a newsletter kind of thing, advising which option to enter at what price, with a stop and - most of the time anyway - a 100% take profit level, along with a detailed explanation and various additional information, just like the examples on the site.

Subscribers should then look to enter these positions, set the stops and targets, and wait for the trade to develop. Then as time goes by, either of the following things could happen:

1) The position hits the 100% take profit level during one of the intraday market sessions, position is closed for a nice 100% gain.
2) The position hits the stop during one of the intraday sessions (or gaps below it), stop is executed, position closed for a loss.
3) The option gaps up above the take profit level, in which case the limit should be immediately executed, resulting in a gain above 100%.
4) The position doesn't reach stop, nor target until the expiry, and so the position is closed at whatever price is available before expiry.
5) You send out an email advising to close a position at that given time, based on your judgment.

Am I getting all this correct? Sorry, I'm a bit new to option trading, have some experience with forex and stocks, but not with options, hence my meticulous questioning :)

Sincere thanks,

Your summation is exactly correct!

Regards,

Ian

We appreciate the concise questions asked and the clarity reached by this communication. Please feel free to contact us with any questions you have, and we will endeavor to answer them as promptly and clearly as possible.




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