When you say a stock is a buy up to a certain price on a move, why do you limit the buy point? Is the limit your short term target?

The limit we put on some plays and the buy points is based on our method of not chasing stocks that are extended on a move up. If you buy in after a stock makes its initial run up, you could be stopped out (applying an 8% sell rule) if the stock runs up 10% and then tests its breakout. By limiting the buy to the 5% – 7% above the breakout, you won’t get stopped out on a move back to test the breakout. This is really important with options. You don’t want to have to ride a stock back down. We often enter an option position on a breakout, sell when it seems to be topping on its initial run, let it fall and test the breakout, and then catch it when it moves back up on rising volume. That way we can play both moves, and we don’t get caught having to hope that the breakout holds and the stock starts right back up. With options, time is very certainly money. We would rather ride the move up twice and make money on both than get in late and then ride a position down, underwater the whole time.