update to $WFC Options Action trade - Dan

12 oct - Options action should have covered this last week since dan made this adjustment on 2oct like i posted below..so 10 days have gone by if you entered the trade and didnt catch the tweet. heres the video clip WFC clip . the long jan38call that dan is holding is going for about .35 now. would have said try to sell front month calls against it to further lower the cost basis while waiting to "spread it out" ..in this case the Nov38 are going for just pennies so scratch that idea . in hindsight , when closing out the Put of a risk reversal to free up buying power it might be tactically better to "spread out" that call at same time to bring in more premium, ie lower the cost basis, or just close out the call as well..since your thinking its going lower anyway , thats why youre buying back the Put. going to need a decent move on this slow money stock to get a profit now.

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2oct - interesting how this is playing out. see it alot, when traders sell a put or do a risk reversal and the stock moves down a bit, they get shaken out. the would be ok owning it lower thinking gets thrown out the window. you can see dans write up on what hes doing here risk reversal . Basically buying back the short 33put for a loss of .22 and holding the long call. still has 3 months to go till opex so was a bit surprised that hes jumping ship so soon. will keep tracking that long call .

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14 sep - as posted on his website also, Dan has a risk reversal trade on  the show today for WFC, heres the clip WFC clip

Buy the Jan 33/38 risk reversal for .10 (sell the 33 Put / buy the 38 call )

i like risk reversals, usually high probability winning trades.. my usual comments, the "you may have to buy the stock" commentary goes along with these type of trades because of the short Put..you have almost no risk of getting "put the stock" until the Jan opex, wish that was made more clear. also figure on having to set aside buying power/margin equal to having to buy the stock at 33..so figure $3300 depending on your margin situation. although you can do risk reversals on any stock, they tend to work better if you are ok owning that particular stock if it goes down..many say they would but chicken out when it goes lower and just take the loss vs getting put the stock.. so decide which camp you are in before entering... if stock moves up nicely look to close out that short put and possibly selling an upside call to "spread it out" . see all of dans on-air trades in this google docs spreadsheet

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