Explore Your Options by Tom Gentile
ARTICLE SYNOPSIS ...Explore Your Options by Tom Gentile
DOUBLING DOWN ON OPTIONS
Does doubling down on a losing options
position by purchasing more and thus
lowering the breakeven point work the
same as it does with stocks? Thank you.
-- Fiorenzo Primavori, Genoa, Italy
Yes and no. As a way of dollar cost
averaging, yes, this does work. If you
decide to buy IBM 70 calls for 7 points and
then the stock breaks down, you could
purchase an equal number of call options
for a lower premium, thus bringing your
breakeven down closer to today's price.