Scale-down buying and scale-up selling by Jerry Kopf
ARTICLE SYNOPSIS ...Scale-down buying and scale-up selling
by Jerry Kopf
Professional traders, like the average retail speculator, are often right and often early. Good option
traders promptly jump on a developing trend. But the cost of buying a wasting asset too early saddles the
buyer with a temporary loss. Later, when the forecast proves correct and the calls climb sharply, the
benefit of scaling down becomes evident.
Of course, many traders will abide by the maxim: Never average a loss. For market makers, that may be a
good rule. In a bind they can hedge calls or puts with other options. The average retail ...