When to put Stop Limit?

[spider_pig]

Mr. Market / All others,

I recently got burned last month on ULTA (purchased before MR.M) when my stop loss kicked in at 8% below what I purchased; it then shot up and is now at +60! ugh!

Please let me know your strategy for putting in a stop loss.

[mrmarket]

Mr. Market / All others,

I recently got burned last month on ULTA (purchased before MR.M) when my stop loss kicked in at 8% below what I purchased; it then shot up and is now at +60! ugh!

Please let me know your strategy for putting in a stop loss.

I never use stop losses. I stay well diversified on my picks, so even if they go to zero, it doesn't hurt as badly.

[wooish]

Mr. Market never uses stop loss. After observing many of Mr. Market's picks, I found that many of his picks drops in PPS after he initiated the buy.

He's what I do when playing a couple of Mr. Market's picks just to test out my strategy. I sell short term PUT options to earn the premium, if the PPS drops and I got assigned the stock I'm getting the stock cheaper compare to buying the stock outright. I'm basically getting paid to wait for a lower price entry. Isn't that awesome?

Second thing I want to try is buy the stock when Mr. Market's announces new pick then sell the Covered call. I then use the Covered call $$$ to buy slightly out of $$$ puts. This is a very popular option strategy in which I'm still learning.

[smaskell]

Trade Offs...

It all depends on how strongly you trust the trend. Selling puts helps if the stock drops and you get in at a lower entry. However, if the stock continues up you will get a smaller profit on the expiring puts instead of the larger one by just holding the stock. Same is true doing buy writes. A 15% OTM call will generally have little value. A close to ITM call will get you premium but at the cost of limited profit. Also, writing puts and calls locks you into a commitment of lots of 100 shares. Unless your account is sizable you would need to invest a significant portion of your account on a single trade. Ex, TSCO = $60. You'd have to buy at least $6k of stock to write just a single call or you'd have to be able to buy $6k of stock to sell just a single put. If you're doing 10-14 position sizing you'd need an account size of +$100k to make it workable. Not sure what the average account size on this board is but I'm not quite there yet. On my way, but not there yet.