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Posts Tagged ‘options’

The options market offers market traders with many unique possibilities. Utilized in the proper approach traders will considerably increase profits, as well as hedge positions correctly, to safeguard profits and assets.

The problem is that options are still inadequately understood and most individuals don’t recognize how to utilize them properly and due to the fact that they are a leverage instrument, they can in actual fact cause problems for lots of traders.

The key to actually understanding options and how they can form a correct trading strategy or business, is through the right instruction and preparation.

Many options coaching firms merely teach their students established methods and then leave them to get on with things alone, within the markets.

This does not give traders the correct knowledge and ability to utilize the possible edges of options. Traders really need to trade with successful traders, who will teach them how to seek out opportunities within the marketplace that will really permit them to get the advantages that options can offer.

Once traders are able to find these opportunities within the market, they can then learn the right methods to get the best out of each possible situation.

Following standard coaching strategies, traders are actually taught to run before they can walk and this is why a lot of people run into problems, or merely don’t reach their full potential in the options industry.

There are options firms that will offer traders the proper sort of education, in addition to allowing them to trade and learn side by side with successful full time traders within the markets. If a trader is completely serious about becoming successful with options, using one of these organizations is completely vital to achieving their goals.

However, if you do decide to sign up with one of those companies it is absolutely vital that you keep focused on the course. It is simply not enough to only sign on and scan the information or follow through the lessons.

If a trader is going to get to their full potential, then they need to be prepared to put in  100% effort and accept that their will be a learning period involved.

That being said, the best coaching organizations will offer their traders all the support that they need to ensure that they are successful and reach their potential.

Using one of those organizations can enable anyone to attain their potential and to realize a full understanding, there are however, many organization that provide courses with some pretty amazing boasts.

Any courses or firms claiming enormous earnings or riches to be made with simply a little effort, or in just a few minutes a day, ought to invariably be looked at with a good deal of caution, because nothing good comes without putting in the correct level of work.

To see an independent review of the top companies to learn How To Trade Options with, just Follow This Link.

Many more folks in the market are beginning to realize that options are a perfect instrument for maximizing profitability, in addition to protecting capital and assets through proper hedging techniques.

In fact Options are often called the only true way of hedging. Whilst this can be correct, it’s just now that people are actually starting to understand the potential benefits of options, the problem is that they’re still poorly understood and largely utilized incorrectly by traders within the market.

The approach to make sure that a trader totally understands how to make use of options in a way to ensure maximum profitability for his or her trades or business, is thru smart education and training. This is often the single most significant thing {that a} trader can do in their career.

But, there’s a common issue with this, in that most of the options trading corporations teach options back to front. This means that they teach basic options students to their students and then leave them to start trading live within the market.

This is where the Options Uni is different. They have the philosophy that the real manner to be able to trade options correctly, is first by being able to find opportunities where Options will be utilized effectively.

They teach their students to be able to find these opportunities and once a trader is capable of doing this, they then go on on to teach the effective strategies and techniques for each different scenario.

Options University offers a complete vary of courses from the beginner level right through to advanced and mastery programs.

Options Universtiy is run by experienced options traders who trade continually within the marketplace. This means they possess and expertise to correctly teach what traders need to know. They additionally offer live trading events and seminars, where traders will be taught and trade in real time with professional traders.

No other options trading organization currently takes the same approach, or offers these opportunities to trade and study next to successful skilled traders.

But, if a trader is committed to understanding the full potential of options then they have to go further than simply signing up with the options university.

To be a successful options trader a student must be prepared to be one hundred% committed to the course and training.

An example of what’s doable when committed to the program was shown in 2007 when Ron Ianieri, one of the founders of Options University and an extremely well thought of options trader in the market, took a group of 12 novice traders thru an intensive 3 month program which brought them by the hand and led them all thru to a complete options mastery level.

For additional information on thisOptions University Review, just Visit This Link.

10 minute swing trading strategy

It can be hard to believe that after learning the 10 minute swing trading strategy, you will be well on your way to making consistently profitable trades?Although some people may doubt some trading success stories, really they speak for themselves, the fortunes made are real even for those who claim not to have spent too long on their working trading week. Day traders aims are very different to swing traders as they look to make their profit on a trade within 24hr periods whereas swing traders do so on a weekly time frame. This makes it possible to have a daily 10 minute swing trading strategy.

There are various benefits to swing trading and one of the biggest attractions is the time you can save compared to day trading. Many day traders find themselves staring for hours at their computer whilst swing traders spend only minutes. In addition to this it help train you to be extremely disciplined, which is vital in trading.Something that beginner traders must realise is that trading everyday could actually harm your trading success.

You can find many trading courses online that all claim to have the best strategy, but a new course is due for release in early November, called Ultimate Swing Trader, may well prove to be the best yet.

For right now, we should take a closer look at the art of swing trading

With this in mind you should start by taking account of the time you spend on trading.There are quite a few things that can lead to a trader’s downfall but the most common above all is over trading. The majority of traders do not really think much before jumping into a trade as they want to be taking action all the time.There are many different ways it can go after this. A lot of traders spend a lot of time desperately trying to get their money back which often results in them emptying their account. Even worse, they quit!

Traders should always have self discipline, and will learn it here.  When swing trading you only need to look at your charts at specified times of the day, but when you day trade you need to spend a lot more time sat behind your computer screen.At first this may sound relatively easy, however, it can be hard in the beginning but you will soon have taught yourself the discipline.

For more information on swing trading and a closer look at the new 10 minute strategy please read my Ultimate Swing Trader review.

Recession proof Trading!  Trading Pro System Review.

It is a fact that almost all of the automated trading platforms have gone out of business in the last one year.  When the current is smooth, you don’t need a sophisticated algorithm to guess the stocks that may do well – even pure luck will suffice.

However  in times like these, real programs come to the fore, and the Trading Pro System is one of those programs.

The Trading Pro System incorporates a series of 41 videos that take us from first to the ultimate step of the trading system, and when we are done, we will certainly feel ready to take on the biggest challenges.  Even if you have been in trading for several years, you’ll still notice that there are such a lot of things that weren’t on our radar all these years!

There are two levels of memberships offered on the Trading Pro System, and depending on the level at which you consider yourself to be, you can select.  The 1st one is a $ 37 each month membership, and the second one is a $ 197 life time membership with no repeat billings.  What we’d suggest is that you get started with the monthly membership, and if you are feeling that the program is working for you, move on to the next level so you economize.  If you feel the Trading Pro System is not working for you, you can ask for a 100% refund, which is in place for a period of sixty days.  It is indeed rare that a monetary product ( especially one that’s an e-book ) includes a refund.  That is usually because even if you ask for a repayment, you continue to have access to the book and the videos, right?  But the faith the founders Vallieres and Holmund have on this system shows thru this.

Try it if you’re serious about earning money in these times of recession.

Learn Options Trading

Trading options is both similar to and different from trading stocks. There are many ways to make money trading stocks from going long to day trading.In this regard,options and stock trading, are similar.

The starting point for learning options trading is knowing the difference between an option and a stock. An option is a “right to purchase” a particular stock over a period of weeks or months,and it expires on a specific date.Since we’re talking about stock prices here, there is volatility in their value over the option expiration interval.

Options, on the other hand, expire on a specific date, so you’ll need to exercise them on or before that date. And you don’t even have to exercise your option if you so choose. And you can purchase a stock for much less than it’s market price by purchasing an option.Options traders can leverage their investment by being able to trade more stocks.through an option, they can buy a $100 stock for a fraction of that price.Hence, they can acquire options for more stocks than if they were actually purchasing the stocks outright.This ability to leverage your investment makes options very attrative.

There are several different types of options. You can exercise an American option any time up to and including the expiration date, but European options can only be exercised on the expiration date.and to make matters more confusing, where you purchase the option has no bearing on whether it’s American or European.The “American” options tend to apply to stocks and bonds, while the “European” type applies more often to indexes. And options expire on the Saturday after the third Friday of the month. But U.S. markets are closed on weekends, so “American” options expire on the third Friday of the month and ”European” options the following day.

An option is a contract that gives you the right to sell (a put option)a stock or buy (a call option) a stock on or before its expiration date.There are several strategic choices when you purchase an option. You can either hold it until its expiration date and exercise it just before it expires, or you can exercise it any time before that date.Or you can sell the option itself before the expiration date and recoup some of your investment. If the option expires and you don’t exercise it, you lose your investment.Let’s look at these situations more closely:

Let’s say you buy an option for Acme Chemicals Corp.for $2 a share with a strike price of $20. Now most options contracts require a minimum purchase of 100 shares, so you’d have to pay $200 (for 100 shares) for the contract.Acme’s stock rises to $25 shortly thereafter and you decide to take your money and run, so you exercise your option. You exercise your option and buy the stock for $20, then you turn around and and sell right away it for $25.You deduct the  $2-per-share cost of the option and you’re left with a $3 per share profit,or $300 less brokerage fees.Pretty conservative, but you made money.And that’s a good thing!

But let’s look at the opposite scenario. What happens if the Acme’s share price doesn’t rise. What if it goes below $20? If you sold your options for half of what they cost you, in this example,you’d only be out $100. Just remember that just because you own an option, you do not have to exercise it. So you can sell the option and recoup a portion of your investment. This is better than acquiring 100 shares of Acme’s stock outright. You could exercise your option as soon as you can realize a profit or you could wait it out and try for a bigger profit any time before the expiration date. My personal recommendation is to take the conservative approach and you’ll more likely see consistently positive returns, but most likely not any big killings. But that’s just me. The higher the risk, the higher the return. Greater profits. And potentially greater losses.Just like most other investments.

This is just a simplified explanation of what trading options entails. This is more complicated that this example, so you really should educate yourself on this subject before you start investing your money. The best options trading trading tutorial I know is the one taught by David Vallieres, which you can review here and the video above from the free demo video series he provides. This course is the best in my opinion because Mr. Vallieres not only teaches you the basics but also shares with you his money making guidance.

Brought to you by etf trend.

Share options are contracts to buy (or sell) a stock at a certain price before a certain time in the future. Buyers of options have the right to buy the share at the specified price, but they are not obligated to exercise their option.  Sellers of options have the obligation to sell the underlying stock if the buyer of the option wishes to exercise it.

A contract to buy is called a ‘call option’. The buyer of a call option hopes the price of the underlying stock will rise, allowing him to buy it at less than market value. The seller of the call option expects that the price of the share will not rise, or at least is willing to accept a partial loss of profits made from selling the call option.

For example: An investor buys a call option on IBM with a ’strike price’ (the price the stock can be bought) of $50. The current price of IBM stocks is $40 and the cost of the call is $5. If the price rises above $55 (strike price + cost of call) the buyer could exercise his right to buy and make a profit by reselling on the open market. The seller would still gain from the increase in price from $40 to $55 plus the $5 he made by selling the call. If the price remains below $55 the call would not be exercised and the seller would profit by $5 per share and the buyer would lose his $5 per share.

Options are traded on specific shares. They detail the name of the share, the strike price (the price the stock can be bought or sold at), the expiration date and the premium (the price of the option itself). After the expiration the option cannot be exercised and is worthless. Options have a value and are actively traded. An option to buy Microsoft, for example, is listed like this:

MSFT Jan10 22.50 Call at $2.00

This tells us that an option to buy 1 share of Microsoft at $22.50 before the third Friday in January 2010 can be bought for $2.00. Options usually expire on the third Friday of the specified month, and they are usually traded in lots of 100. To buy this particular option you would have to pay $200 (plus brokerage fees).

An option to sell a stock is called a ‘put option’. This gives the holder the right (but not the obligation) to sell a particular stock within a certain time period at a certain price. In this situation the buyer is expecting the price of the stock to fall but does not want to sell outright in case the price rebounds. The seller feels that the price is stable or is willing to acquire the stock at the low price. 

For example: An investor buys a put option on Microsoft with a ’strike price’ (the price the stock can be sold) of $35.  The current price of Microsoft is $40 and the cost of the put is $5. If the price falls below $30 (strike price + cost of put) the buyer could exercise his right to sell at a higher price than market. The seller would have to buy the stock at the higher-than-market price but any losses are offset by the $5 he made by selling the put. If the price remains above $30 the put would not be exercised and the seller would profit by $5 per share and the buyer would lose his $5 per share.

As can be seen, stock options can be used to protect against loss or as an investment opportunity in their own right.  They are generally used as part of a trading strategy which combines the purchase of stock with the purchase of options.

For example, in a bull (rising) market you could buy stocks and call options and sell put options. This allows you to take full advantage of rising stock prices – the stocks you buy will rise in value, the call options will allow you to buy share at less than market prices, and if the market dips and the buyer of your put option exercises it, you can pick up additional stocks at low prices. If the buyer does not exercise the option, you make money from the sale of the option.

Conversely, in a bear market, you can sell stocks, sell calls, and buy puts to limit losses and generate profits.  Unstable markets can use a mixture of puts and calls to maximize profit potential.

Options are traded on Futures and Options Exchanges. There are 6 such exchanges in the United States including the American stock Exchange (AMEX) and the Chicago Board Options Exchange (CBOE). In Europe the main options exchanges are Euronext.liffe and Eurex.

For more financial help please see What Are ETF Trends? and trend following for a living.

#1 Trading options in only one direction and that’s usually up.

A very common mistake that traders make is options omission. They forget or fail to realize that options trading allows one to make money on falling prices as well as rising prices. By not trading in both directions they leave a lot of money on the table. In effect, by sitting on the sidelines during market downturns, they are leaving half the available action on the table.

Additionally, security prices tend to fall faster than they rise, so some of the biggest, quickest gainers are executed via falling share prices. So if an options traders is not considering short trades for their investment portfolio, they are missing out on some really solid trades.

#2 Not having money-management rules in place.

Another common fault is not following proven money management tactics. Critical metrics arise from guiding principles such as how much should you trade and how much should you risk? Where should you set your stops or in what manner should you hedge?

Solid money management rules control help you to control your trades. And the most important thing is they are helpful in preventing big losses and many sleepless nights.

#3 Letting your emotions dictate your trade entry and exit points.

Too often irrational behavior drives investors into trades that lack appropriate fundamental or technical support. Instead of letting sterile indicator guide their decision making, they operate on emotion or impulse. The fear of price ups and downs makes traders bail too soon and the fear of losing money makes them stay with the trade too long.

Since there is no way to completely eliminate your emotions you must control them. The most realistic and effective way to do so is to develop a set of trading rules to constrict your trading activities and to conduct the majority of your research and trading decisions outside of open trading hours.

Although it may seem obvious to most stock market swing traders there are a number of simple rules that you can follow which will ensure that you have more success when buying stocks:

In the USA stock market there are 3 major indexes which are each made up of a basket of stocks, they are the S and P 500 (also known as the S&P500), the DOW 30 and the Nadaq 100. These indexes generally only contain major blue chip  stocks, as long as you buy from these 3 groups you will at least know that you are getting a well known solid stock.

For example the DOW30 contains major industrials and large multinational stocks such as Home Depot (HD) and Johnson and Johnson (JNJ) whereas the Nasdaq 100 mainly contains techical companies such as Apple (AAPL) and Miscrosoft (MSFT).

Always buy a stock that is liquid, this means that it is a highly traded stock, this will enable you to quickly buy and sell at the price you want without having a delay. You will also get a lower spread, thats the difference between the BID and ASK price of the stock. For a stock to be considered highly liquid it should trade at least 500,000 shares per day, ideally even more.

It is best to avoid stocks that are bellow $10 as this usually means the company is in trouble, although with the bear market of 2008 there have been a lot of good stocks at bargin prices between $5 and $10. Avoid buying a stock below $5 at anytime.

Another consideration to make is options, does the stock has options?, this will be important if you want to trade options around your stock, such as a covered call, or you may want to buy a PUT option in order to protect your stock.

Be very cautious about buying a stock just before it’s earnings release, stocks often drop significantly if you come out with a poor report. Earnings releases are 4 times a year with one of them being the annual report.

If you are going to trade options make sure that you learn how to trade by getting some good education. There are many swing trading strategies that work well with stocks in todays volatile markets.

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There is a lot of hype surrounding options trading, and for good reason, it’s a good way make a lot of money fast, or can be used to grow your capital consistently month after month.

There’s also a lot of hype about how complicated it is to learn and why you need to spend thousands of dollars on options trading education before you get started. Needless to say this last statement usually comes from trading seminar companies trying to sell your their trading course on options.

Lets cover a few of the basics about options trading and set you straight about a few important points. Firstly yes it is true that you can make a lot of money trading options, but of course you can also lose money just as fast.

When trading stocks your leverage is 1:1, if you go full out on margin you get get 1:2 leverage, but thats about it. With options it is not as straight forward to calculate the leverage but generally speaking you can get between 1:5 and 1:10 when you buy an option on a stock, or ETF.

So with 1:10 leverage, when the stock increases by 5% your option can increase by approx 50%, and this can happen in just a few days, this is why swing trading strategies using options on stocks is so popular.

However the downside is that a big loss can also happen, if the stock drops by 5% your option can also drop by 50%, at which point you may want to close the trade and save some of your option value, it really depends on what your stop loss and risk.

What I’ve described above is called directional option trading where you are betting on the getting the direction of the stock movement correct, this is highly speculative. Options can also be used in option strategies which are much more non directional, such as covered call trades, credit spreads and Iron Condors. In these trades there is much less dependance on getting the stock direction correct, but it still matters.

So should you learn to trade options?, in my opinion you should not do directional option trades until you become very good at trading stocks. This is because you must be very precise with your entry and exit strategy and trading plan, and be very good at technical analysis.

Whereas if you want to do non-directional option trades you don’t need to be such an experianced stock trader to be successful, but of course it does not hurt either.

Learning how to trade options is a very good skill to have, but don’t rush into it and blow out your account. Make sure that you get a good options trading education before you start, and also make sure that you have a very solid stock trading education as well, such one from Top Dog Trading Review.

One of the most popular technical analysis indicators is the simple moving average also known as SMA, if you learn how to use these correctly they can be a very useful tool to help you to make good trading decisions.

The 50 simple moving average, or 50 SMA, is simply the sum of the last 50 values for each period, divided by 50, this is a moving window, as time moves on so does the average. Notice that I used the term period because this indicator works on any time period in exactly the same way.

It can be used on monthly, weekly, daily, hourly, 30 minutes, 15 minute and on whatever time period you want to monitor and trade. Although the SMA is the most commonly used there is also the exponential moving average or EMA. This is a weighted version of the formula using the mathematical exponent function to give more weight to the more recent values, this has the effect of making it a much faster average that many traders like.

The reality is that it probably does not matter if you used the SMA or the EMA, what does matter however is that you use one or the other and then be very consistent with it. Do not switch between them, it is more important that you learn to trust your chosen indicator then a slight difference in its value.

The simple moving average is primarily used to determine what the current trend of the stock is, depending on the value used it could be a short term, medium term or long term trend. An important point to note is that moving averages are really only useful when the stock is trending, if the moving average is flat, i.e. horizontal on your chart it can become very choppy, this is a good time to stay out of the market.

The general rule is that if the current price is above the SMA the trend is up, if below the trend is down. This is very important to know because it forms the basics of trend trading and trading with the trend.

For the short term trend many traders like using a 5-8 SMA or EMA, here is a trading secret, never trade again the direction of the short term tend, this is really just common sense when you think about it.

Moving averages can often act as support or resistance, many traders use the 15, 21 or 30 SMA for this purpose.

There are a number of other very important moving averages that you need to know about, these are the 50, 100 and 200 SMA, and this mostly applies to the daily and weekly charts. A lot of big players in the markets, the mutual funds, investment banks etc use the 50 and 200 SMA as support and resistance, if they decide to buy or sell based on these you need to follow suite, the 100 to a lesser extent. These are very useful averages to watch if you trade EFT’s like an Oil ETF.

A useful tip is that when a stock breaks through one moving average it will often move all the way to the next, for example, if a stock breaks the 30 SMA it may move to the 50 before finding some support or resistance.

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