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Timing The Trade Buy-In – Playing It Smart

Using Teladoc As An Example!

Friday, May 28, 2021

by Ian Harvey

Timing the trade buy-in is one of the most difficult decisions for the trader! When to enter a trade is one of the crucial points as to how much you profit, or lose, at the time of exit.

After deciding on a trade, either through research or a recommendation from us, there are several questions that need to be considered.


Buying at the RIGHT TIME – Timing The Trade Buy-In

Timing the entry of a new trade is one of the most difficult decisions for the trader!

After deciding on a trade, either through research or a recommendation from us, there are several questions that need to be considered.

Should you enter as soon as the market opens, either at the expected price or market price so that you don’t miss out?

Should you wait for the market to settle down after the usual frantic start at 9:30am? This means that the price you expected to pay may have jumped considerably, remained at an expected level, or has dropped, which makes entry a lot cheaper.

If the price has skyrocketed, is it best to wait until the next day or forget about entering the trade altogether.

The length of time to expiry is also an important factor when deciding on the entry cost. With weekly options there is normally a catalyst(s) that provides the reasoning for the trade entry in the first place; therefore, a higher entry cost may be reasonable. For longer expiry options trades the cost of the entry may not be as applicable.

Another consideration for timing the trade buy-in is the market conditions. Is a “bull” market running or is a “bear” market in play. At this stage it appears that the bulls are still in control. The market conditions are based on many various factors driving the direction of the market; such as the state of the economy, international happenings, public sentiment, supply and demand, growth/decline in major industry sectors, earnings reports, interest rates, inflation and unemployment to name a few.

For an example of timing the trade buy-in can be seen by looking at our latest weekly trade on Teladoc Health Inc (NYSE: TDOC).....

First.....let us look at the recommended trade.....

** OPTION TRADE: Buy TDOC JUN 11 2021 150.000 CALLS at approximately $4.70.

(Some members have asked for the following suggested exit prices.....

Place a pre-determined sell at $9.40.

Include a protective stop loss of $1.90.

Entering the Trade.....

The market opened on a high note but quickly turned into a sea of red, before rebounding about 20 minutes later.

Now this is where it becomes interesting when timing the trade buy-in – by buying at the start of trade the cost of our trade would have been $4.55 – if the trader waited a few minutes it is now a case of finding the bottom price which occurred about 20 minutes later – at a cost of $3.00.  Bear-in-mind, the market could have gone the other way and therefore, timing the trade buy-in becomes a different scenario.

Exiting the Trade.....

Now, it becomes a decision as to when to the exit the trade. Again, there are several factors that will need to be considered – time to expiry, has the catalyst(s) been met, risk tolerance of the individual trader, expected market movement, to mention a few reasons.

Read about the catalysts here..... “Teladoc Weekly Call option Recommendation”

This trade managed to hit a high of $4.85 at 2:00pm – a nice return of 62% in a very short time. This is not the suggested exit price, but, that is exactly what it is – A SUGGESTION, not obligatory.

But, should you wait for higher returns? This is where you need to have your strategy in place and your risk tolerance in-control. Many of the trades recommended by Weekly Options USA far exceed the suggested exit prices, so a difficult decision needs to be made.


Was A Good Strategy Employed In Timing The Trade Buy-In On This Teladoc Weekly Options Call Trade?

What Other Trades Are We Anticipating?

Do You Wish To Be Part Of This Action?

For answers, join us here at Weekly Options USA, and get the full details on the next trade.

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