About Intuitive trading, 2 April 2007

General notes
Through the weekend I have reviewed optionsxpress.com's option order possibilities and I've seen that should I go live, they have more advanced ordering possibilities than 'just' OTO and OCO. Namely, OT2 (one trigggers two) and OTO trailing stop (that gives the flexibility to trail a stop after another trade was executed, say a buy to open one). Sexy, isn't it?
Also, I have reviewed the trailing stop issue, also on optionsxpress.com and here's a wonder table, I have found:

Trailing Stops

1. On entry of the order the bid/ask will be used -- bid for sell order on long position, offer for buy order on short position;
2. On the movement of the trigger, the bid/ask is used, the bid is used on sell order on long position while the ask is used on buy order on short positions;
3. On the triggering of the order, the bid or last is used on buy orders while the ask or last is used on sell orders, the last is only used on triggering if it is in between the bid/ask quotes

I have changed the font face to bold at the most important point, at least for me it is the most interesting. As I have translated this to my words, it means that my trailing stop order by default is triggered if and when the actual ask or last (if it it between the bid and ask) price has been reached/printed/actualized.

Example:

I have gone long on KLA Tencor (KLAC APR 52.5 Call) @ $1.75 at market. Then when I see it moving above $1.9 (my first target) I want it to start to trail a stop down 5%, so I input a trailing stop order, as detailed above.
Then, I see the quote climbing up to $2.1 (bid $2.1 x ask $2.2 and last at $2.05) where it meets resistance and bears start to take over the terrain, causing the option price to move back under $2 (bid $1.9 x ask $1.95 and last at $2.03) .

What happens in this imaginary case with my poor trailing stop?

1. the ask moved up all the way to $2.1 first. Thus, installing a point from where the 5% (which is $0.105 in this case) can be calculated downward.
2. thus, now my trailing stop starts to work as a regular stop order at $1.995.
3. In the above scenario, my stop order would be executed in the moment the price prints under $1.995 by matching another trader's bid at $1.9 with my sell to close, market order.
   

Watchlist additions and filtered trade candidates
BSTE - Biosite ( a biotechnology firm to be acquired by a rival).
TTC-A & MACDV: (nil)
GAPHV: GRP
Tuto Long: VIP
Tuto Short: (none)

Trade Session notes
There was a positive bias in the air thus @ 11:18:59 AM - I went with a GS Apr 210 Call (4 contracts) at $2.2 each, based on a Tuto Long entry signal 2 bars earlier, already reversed from lower 2-3 SD BB area.

Open Trades at market close 31 March 2007

.ACLEG

ACL MAY 135 Call

$131.93

2

$3.5

($140.00)