Learn To Trade Options
What are options good for besides gambling?
The way most people think of options is as a low cost way to take a flyer on a stock. If it costs $50 per share to buy the stock, you would have to pay $5,000 to buy 100 shares in a cash account and $2,500 in a margin account. You could buy 1 call or put for $100 and have the right to buy or sell the same 100 shares at a specified price (the strike).
This is certainly a viable strategy, though I don't do this unless there is an event like earnings or an FDA announcement. And rarely even then.
The market moves in fits and starts. It can noodle around for a month ten points up or down, and then move to a new level 2% away in a day. So my favorite strategy takes into account that most of the time the market goes nowhere.
When a new version of Windows came out a few years ago, my friends at Citibank told me that they were pricing a collar to protect Bill Gates' holdings of Microsoft. Find out how that is done, sometimes at no cost.
Many investors bring money into their account every month by writing covered calls. I don't hold any stock, so I have other, in some ways better, ways to bring in income weekly. I like to close out my positions every week, usually before Thursday. That way, I am not exposed to market moves for a good portion of the week. I put on my position on Friday, so I usually carry it over the weekend and for at least Monday and Tuesday.
It is important to understand options even if you never buy or sell any, because they are a window onto the market's expectations. For example, say you own Google stock and it is about to announce quarterly earnings. How much uncertainty is there in the market? Uncertainty translates to risk. The options market tells you.
Only 1% of traders know about this.
Go to Learn To Trade Options; opt in and see a short video describing my number one favorite way to trade options.
Pay the $4.95 shipping and I will send you a CD with six or seven more ways. It is worth the price since you will learn a lot. There are special bonusses there too.
The way most people think of options is as a low cost way to take a flyer on a stock. If it costs $50 per share to buy the stock, you would have to pay $5,000 to buy 100 shares in a cash account and $2,500 in a margin account. You could buy 1 call or put for $100 and have the right to buy or sell the same 100 shares at a specified price (the strike).
This is certainly a viable strategy, though I don't do this unless there is an event like earnings or an FDA announcement. And rarely even then.
The market moves in fits and starts. It can noodle around for a month ten points up or down, and then move to a new level 2% away in a day. So my favorite strategy takes into account that most of the time the market goes nowhere.
When a new version of Windows came out a few years ago, my friends at Citibank told me that they were pricing a collar to protect Bill Gates' holdings of Microsoft. Find out how that is done, sometimes at no cost.
Many investors bring money into their account every month by writing covered calls. I don't hold any stock, so I have other, in some ways better, ways to bring in income weekly. I like to close out my positions every week, usually before Thursday. That way, I am not exposed to market moves for a good portion of the week. I put on my position on Friday, so I usually carry it over the weekend and for at least Monday and Tuesday.
It is important to understand options even if you never buy or sell any, because they are a window onto the market's expectations. For example, say you own Google stock and it is about to announce quarterly earnings. How much uncertainty is there in the market? Uncertainty translates to risk. The options market tells you.
Only 1% of traders know about this.
Go to Learn To Trade Options; opt in and see a short video describing my number one favorite way to trade options.
Pay the $4.95 shipping and I will send you a CD with six or seven more ways. It is worth the price since you will learn a lot. There are special bonusses there too.
Contents at a Glance
Options Strategies I Use
Go to Learn To Trade Options; opt in there and go straight to my short video describing my favorite options trading strategy.
TradeNakedOptions blog
trade options safely and profitably
by GilY
Hello world. This is my bio. I can edit it later!
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