Today’s GOOG tout suggests naked shorting some out-of-the-money calls if the stock rallies to a certain Hidden Pivot midpoint.  Although I’ve avoided short-option strategies in the past, I plan to offer more of them henceforth, since they can open up possible opportunities in high-flying stocks such as GOOG, AAPL and PCLN. All of these world-beaters can be quite volatile even when the broad averages are mired in crud, and that’s why experienced traders like to leverage them.  You should check with your broker concerning margin requirements and the suitability of your account for holding naked-short positions.

Although the term “naked short” is used by the news media — ignorantly most of the time — to elicit fear, distrust, awe or loathing in readers, the strategy itself is statistically far more likely to produce winning trades than simply being long put or call premium on a directional hunch.  In any case, you should at least try to follow this trade on paper if it fills, since, as you’ll see, there are ways to tightly manage the risk.  In the event we do initiate a short-option position, I will try to spread it off by day’s end, but in any case within no more than a day or two.   Click here for free access, on a trial basis, to all of Rick’s touts.