Verizon Option Trade

I have decided to open a call option position here in $VZ, approaching this trade much like I would be by simply going long.  However, this being an option position, three primary variables were taken into account when I developed an options trading strategy for a position in $VZ.

First, at what price would I be placing a mental stop if I were simply going long $VZ?  Using my trusty Excel position sizing spreadsheet based on a few time and price based volatility variables, I determined that my stop would be in the 35.2 range.  Next, a key component in option trading that is often overlooked is the necessity of taking time into consideration.  Since I expect this trade to work quickly, I calculated that I will be holding the position for no more than 6 trading days.   Lastly, I needed to determine my risk capital.  1% has served me well for many years, so I risked 1% on the trade.

Earlier today I purchased Sept 37 call options at 0.56.  I will exit the trade based on my own discretion/technical indicators (for profit or loss…I’d love to see it get back to 37+), if the price of $VZ drops to ~35.2, or if my 6 day window is hit.

Chart for option trade in $VZ

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