Potential problems with changing a $ trading amount
ID: 182
Category: Equity LEAPs
Status: Resolved
Views: 3365
Question:
I'm currently set to auto-trade with OptionsXpress at $5000 per trade. If I'm in a trade based on that dollar amount, then I double my trading amount to $10000, then Anacott decides to sell more calls against the LEAP, will OptionsXpress attempt to sell twice as many contracts as it should because it doesn't know that the original transaction was for $5000, not $10000?
Solution:
The management trades for a position, ie selling Calls, are always 'tied' to the underlying LEAP. So if you have 5 contracts of XYZ LEAP and you then increase your trade amount to double the original value. When we do a management trade on XYZ only 5 contracts will ever be sold. The trade amount only comes into play when opening new positions.
[--- UPDATED: 6/03/2005 09:07:31 BY AGENT: Rob Camden ---]
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