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Bouncing Options
Bouncing Options


When a stock bounces so do the options. I play bouncing options on stock that is somewhat higher in price, above 20 dollars. This is because the stock is to costly to purchase. If the stock ranges from 20 to 23 dollars, buy the 20 dollar strike options at the next month out {at least 5 weeks before expiration} when the stock is at about 20 support. This will cost about 2 1/2 per contract depending on the stock and how much time is left. When the stock runs up to 22.5 to 23 you will get about 3 1/2 to 3 3/4. This is a great rate of return over 35% in just a few days!! This is more risky then bouncing stock but the rate of return is better as well. Always buy enough time and buy on the stock bottom. Place a stop loss just in case and paper trade.
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