It is our general rule of thumb to buy options with 100 or more open interests primarily because that allows us to better use stop losses and shave the spread. In order for a stop on an option to work it has to be triggered by a sale at that level. If there are not many ongoing trades in the option (the problem with low OI) then you cannot utilize stops effectively. We are driven by the technical pattern of the play and, if using options, the ability of that option to make us an acceptable level of profit on the play. If the right combination of pattern and option to make our money exists (we have to bypass some good patterns because the option deltas and prices just won’t cut it) but there is low OI, we will still make the play knowing, however, we will have to monitor the trade without a stop. No big deal really; I did that all the time when I was working another job. There were sometimes I could not make plays because I knew I would be too busy, but I worked around it. There have been many times the play was so good but there were no OI; I was the only OI in those options and still made great profits. I just had to be ready to sell and willing to take what the market maker was willing to pay. On no positions we discuss in the report are we taking opposite positions to those discussed or taking positions before the plays are discussed unless it has already been on the report and has hit a buy point.
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