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Not Always a Rational Investor? You’re Not Alone

Readers say speculation, information overload, and analysis paralysis have trumped the facts at times.

Investing Ideas & Strategies News and Information on Yahoo! Finance

Crunch Time for U.S. Stock Market and ETF Investors

With poor fundamental and technical news along with the end of “QE2,” it is crunch time for U.S. stock market and ETF investors
Yahoo! Finance: Investing Ideas & Strategies News

Will Commodity Inflation Stop This Economic Train?

The race between wages and inflation will be the most important factor in determining the direction of the economy this spring and summer.
Yahoo! Finance: Investing Ideas & Strategies News

Market Action Points to Bull Market Stregnth

Today’s action continues to point to the strength of the current bull market, as in a weaker market the news today could have certainly been a catalyst for a broad sell-off.
Yahoo! Finance: Investing Ideas & Strategies News

Top 3 Options Trading Strategies

Top 3 Options Trading Strategies

If you want to get involved in stock options you need to have a number of strategies you can follow to try and make money in this way.  Needless to say with this kind of involved strategy you should learn as much as you can before even attempting to make money.  It is not as simple as buying stocks, hanging onto them and hoping they will appreciate in value.

So let’s take a look at three ways you can make money with stock options.

1. Work on a smaller time scale than you would with normal shares.

Always remember that you are investing only for the short term.  An option will only remain open for a specified amount of time.  So let’s say for example your option is ‘live’ for four weeks.  You need to make your decision on whether to buy or sell in a shorter time period than that.  If other people are looking to buy an option they want to see a decent amount of time left on it.  Otherwise they are buying something that is about to expire.

2. Hedge your bets to give yourself more options.

Have you ever heard of a put option?  You will if you start getting involved in stock options.  There is always the chance that a stock will depreciate in value, and if you think this might happen you can purchase a put option that acts as an insurance policy against this happening.  If it does drop in value you can sell at the level you ‘insured’ your stock at.  This is a put option and you need to buy it in advance if you think you have a stock that will go down in value instead of up.  This means it is possible to make money even if a particular stock goes down in value.

3. Buy the stock with a call option.

Stock options mean that you have options – they don’t mean you actually own that stock.  So if you want to buy it because you feel it will go up in value at some point, you need to exercise a call option to do so.  While some investors only ever stick to using put options, some will also buy stock with call options.  This gives them the chance to take ownership of that stock.

So consider each of these aspects carefully before deciding which stock options trading strategies you want to use yourself.  And remember that the more knowledge you have, the more chance you have of making a profit from them.

More Options Trading Strategies Articles

Consistent Monthly Cash Flow Using The Iron Condor Option Trading Strategy

Consistent Monthly Cash Flow Using The Iron Condor Option Trading Strategy

Iron Condor Spread is the combination of a Bullish Vertical Credit Spread and a Bearish Vertical Credit Spread on the same underlying asset. Depending on how the spreads are constructed, option traders will potentially be able to obtain twice the collect premium over a single spread position. Since there are bullish and bearish spreads involved in the Iron Condor Option Trading Strategy, there is an upper break even and a lower break even point. Profit is realized when the underlying asset remains above the lower break even point or below the upper break even point. In other words, as long as the price of the asset is above your bullish short strike and below the bearish short strike, the option trader will profit from both spreads through time decay. This strategy can be used regularly on a monthly basis to consistently generate a healthy cash flow in your trading business.

Time decay erodes the value of option prices. There are not many option traders who understand the benefit with trading spreads because it simply looks too complicated. Well, it is not.

Iron Condor Spreads is a market neutral strategy that has positive time decay and negative gamma with limited risk. Traders with any level of option trading experience can use this trading approach. Depending on your brokerage expertise and software, these spreads should be available electronically with single click functionality. Some brokers may even provide better leverage when you trade Iron Condor with them.

The IronCondorSpread Newsletter was designed to identify low risk option trading opportunity when an index remains in a narrow trading range during the current expiration cycle. Holding period is always not longer than 60 days.

In trading, the only objective is to make money. As a trader, you should not into big gains or excitement. Constructed correctly, the iron condor spread can be a consistent income generator. Before getting into new positions, you should look for positions that have an extremely high percentage of profitability. If you have the odds of winning in your favor. you will likely be profitable in the long run.

To do so, look specifically for options that have a relatively higher level of volatility. This means to look for positions that are over priced. Establish a trade positions that you believe that the underlying asset will not move to anywhere new your short strike.

To achieve consistent profit, our Iron Condor positions will always have a wide profit range on the underlying asset. So, in the event that the underlying moves up, down or even sideways, you will always profit with time decay. Having a large profit range is important because it will almost certainly guarantee that we will profit consistently and also it does not require us to spend a lot of time to monitor our open positions. We like the idea of trading with little stress and with little work. Our usual profit target for each Iron Condor spread is 13% to 18%. Profit is usually realized within 60 days.

Iron Condor trading is an effective trading strategy because it is a limited risk approach. You will never lose more that you have allocated for each trade. Although it comes with a high probability of winning, losses can be kept low when the trade moves against you. As rare as losing month may be for us, keeping losses low is the key to any successful trading strategy. While making money is important, capital preservation is equally or more important.

The IronCondorSpread Newsletter, http://www.ironcondorspread.com is the premier website in Credit Spread and Iron Condor Spread Option Trading strategy.

More Options Trading Strategies Articles

Are You Focusing on Active or Passive Investments?

Users compare notes on performance, costs, and complexity.
Yahoo! Finance: Investing Ideas & Strategies News

McDonald’s Seems A Bit Overcooked

McDonalds is a solid and steady combination of quality and dividend growth, but its no bargain at todays prices.
Yahoo! Finance: Investing Ideas & Strategies News

Using Stock Option Software to do Better Business

Using Stock Option Software to do Better Business

If you are just getting into stock option trading, then you are beginning to explore something that could make you a lot of money with just a little up front investment on your part. You can get your feet wet in the stock market without ever buying a stock, but be careful – stock option trading is actually more complicated than stock trading is, and can be a difficult game to play for seasoned veterans, to say nothing of beginners to the field.

If you are interested in pursuing this fast paced adventure, then you need to be aware of the potential for making and losing money. One of the best ways to make money is buying call options and selling them as the price of the stock rises, but how do you know if you got a good deal on your initial investment? It is hard to tell, and that is where the right kind of stock option software can come in handy.

Like the Kelley Blue Book helps car buyers and sellers determine the price of a car, stock option software can help you examine the price at which a stock option is currently selling and help you to decide if the price is a fair one or not. You can save yourself a lot of trouble if you come to the table prepared with the figures, and a good stock option software program is one way to do that.

The software can help you to identify cheap stock options, which can help by minimizing your financial risk and help you to make the serious gains in this tricky game. Stock options can be a challenging field to explore, but having the right map, as it were, makes things a lot easier.

You cannot hope to best the professionals right away, especially not with just the knowledge that you have researched and found on your own. They will have done the same research, and will have done it faster and better than you. This is no reflection on your own skills, but a statement of the dedication that the pros make to professional stock option trading. Help yourself out by investing in stock option trading software to help you keep the edge that you gain in research and to determine the fair market price of the options that you hope to trade in.

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5INTO55: Position Update – BIDU and BMO

So it’s been a few days and I have since updated my portfolio.

• Sold Apple Call Jan 310 last Friday when it was trading at around dollarsignr347. Hindsight is 20-20, but sometimes so is foresight!

• Bought Bank of Montreal options yesterday before things started to go south (for the overall market; BMO.TO held up reasonably well)

• Opened up a long straddle on Baidu (BIDU) – 1 contract each at a strike price of dollarsignr105

I’ll add more details as I get more time – so far I’m tracking +dollarsignr1K in my pursuit of dollarsignr55K, a start that I’m relatively pleased with. You can follow above as I’ll try to do better with keeping the overall status box updated.

- PLI