CERN with a nice setup?
CERN has really good fundamentals, a nice price pattern over the last 2 months, recently closed over it’s 7 day avg after dipping down to it’s 30 day avg. If I were on the ball I would have bought this one this morning, but i was having trouble with my trading software (user error!).
Here’s what I see:
CERN
Underlying: $60.80
Support: $56.50
Risk: $4.30
Sept 65 Call Option
Ask: $2.50
Delta: .57
Option Risk $4.30x.57 = $2.45
Acct Value:$2825.00
Risk = 10%
Since my account value is so small right now for a trading account, this is an acceptible risk for me. Ideally the risk is kept at 1-2%. For smaller accounts $10,000 or less, 5% is acceptable. For $3k, I’m OK with risking 10%…after all, this is my original money from nearly 2 years ago that I am still trading (infrequently).
So I just placed the order, and it was filled at $2.35
Now I’m going fishing!
Suzanne @ July 15, 2009