An Options Strategy for China MediaExpress Holdings
The best policy is to use strategy, influence, and the trend of events to cause the adversary to submit willingly.
-- Sun Tsu, The Art of War
I trade a lot of options relative to my other trading, especially when I want to invest in a company instead of trading the stock of the company. I normally sell, or "write" options, instead of buying them.
Writing an option instead of trading the stock lowers my risk while at the same time providing some of the same benefits of being an insurance company. I get to collect a premium and unless something happens I get to keep all or some said premium. Most people, especially retail traders, think of options as something they buy and hope the price moves in their direction so they can make money. Most options are sold by market makers and other large players. Sellers of options are betting that either the price direction will go in their favor or if not, it will not move against them faster than the time premium decays.
I am working on a multi-part article that goes into the details of trading options and how to avoid the plethora of landmines and obstacles designed to separate you from your money. While working on the article I traded a stock known as China MediaExpress Holdings (CCME) during the recent massive sell-off (I also traded CCME options when the price spiked right before the fall). I realized that the sell-off was so extreme,
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