A Pair of Medical Device Options Bets
- Start small (since options often expire worthless).
- Avoid out-of-the-money-options (buying in-the-money options is safer and more conservative)
- Avoid nearby expiration dates (to avoid theta burn and give your position more time to work out)
I've been following each of those guidelines in my recent speculative options bets, and I've added a fourth one this year: buy options at a discount to model estimates of their fair market value. I put limit orders in for a couple of options after the close Tuesday that met all four guidelines. More on those below, but first a quick clarification, since I've written about options in the context of hedging in recent posts: the trades for which I placed these limit orders are speculative directional bets, not hedges. Hedging versus Betting IfComplete Story »