Article Index

options trading

How Apple Stock Made Us as Much as 175% (While Wall Street Barely Made 3%)

Apple stock

There's no doubt that Apple Inc. (Nasdaq: AAPL) is a fantastic long-term hold. Its growth prospects are excellent, and it will hit $200 a share on its way to being the world's first trillion-dollar company.

That will be great for shareholders when it happens, but it's going to take more than a year to hit those milestones.

But I'm going to show you an easy-to-make trade that made my Money Calendar Alert Members as much as 175% in the 11 days it took shareholders to book just 2.46%.

Here's exactly how we did it...

The Power of the Loophole Trade

loophole trade

Today we're going to examine in granular detail a moneymaking tool called the loophole trade. And we're going to drill down and comprehensibly discuss why certain market conditions would compel us to recommend this tactic.

Remember: Through familiarity that's gained by the proper application of financial knowledge, you can overcome fear of volatility and risk.

We want you to confidently embrace the power of the loophole trade...

Why Earnings Season Is the Most Wonderful Time of the Year for Traders Like Us

Chipotle earnings

If you've traded for more than a few months, you've seen how earnings season can really move share prices - in both directions.

If you hold, say, a blue chip and it hits on earnings, you can book some nice single- or double-digit gains. Or, if there's a miss, you might take a loss.

In fact, earnings season trading is one of the most volatile strategies you can use. It's not for the faint-hearted.

So, let's "scout" my earnings chart to see exactly where our next winning trade is...

Grab Triple-Digit Returns on the Euro's Freefall

euro fall

I just came back from an Alaskan cruise where I paid up and bunked on the top floor.

For these "special" guests, they offered a private courtyard, private fitness center, private showers and steam rooms, 24-hour butler service - the works.

I was able to connect with several foreign business owners and chief executives, and even a fellow trader who happened to be aboard ship.

And it's in my new friends' biggest worry that our triple-digit profit opportunity lies...

A "Euro-Proof" 50% Gain in Less Than a Month

euro-proof graph

Forget about Greece, Portugal, China, and every other country that's making news these days...

The fallout from current (and likely future) debt crises will lead to turbulence in the markets, but it's the inevitable recovery that interests me right now.

We've seen this setup before. In every case where financial misadventure leads to bailouts, one thing is clear: Though the short-term movement of the stock market might lurch to the downside, it has always recovered.

And the American blue chips always lead that recovery. That's where our big opportunity is today...

How Halliburton (NYSE: HAL) Gave Us a 70% Return in 3 Days

20150702-ppt-graph-1

Using our Money Calendar tool, we take a look at Halliburton Co. (NYSE: HAL) stock back in April. It looked incredibly promising.

Even better, this Money Calendar tool shows the moves to be 90% reliable in nine out of the last 10 years. The time frame on average for the move was nine days.

Here's why Halliburton stock made the anticipated move in one-third the time expected...

How to Double Your Money with This Expert's Trading Secrets

top investing strategies

Knowing how to double your money - and do it consistently - is the Holy Grail every investor seeks.

And that's just what Options Strategist Tom Gentile's service, Power Profit Trades, delivers. His system uses options to produce large gains in a matter of weeks. Best of all, it's free.

Here's why Gentile's system is such an effective way to double your money...

The Key Steps to Your First Options Trades

options trades

During the past month we've welcomed in thousands of new subscribers over at Power Profit Trades.

Many of you have started out with "paper trading" on my picks and are excited at the prospect of pocketing the gains in real time.

Taking advantage of technologies that veterans like me didn't have when we started trading is a great idea! I know it's not like real trading, but one of the things using a "virtual" account will do is help you get familiar with order placement through the platform you intend to use BEFORE you commit real money.

For those of you already on "live" platforms, congratulations! You're already enjoying gains.

Beginners are also working through the "how to get started" phase of investing in options. In fact, the most common question I get is "how do I open an account?"

For those of you not yet receiving Power Profit Trades, or for anyone who hasn't traded yet because of concerns over opening a live account, let me take the fear out of what is an easy process.

Just follow my lead...

Since moving to New York City back in the early 1990s, I've witnessed incredible changes in brokerage firms and the financial services industry.

Back then, it took weeks to get an account opened, most trades were done over the phone, and commissions were unbelievably high.

In the last 20 years, however, due to competition and technology, all three of these things have drastically improved for the retail trader. Competition has driven commission prices down to levels that are barely factored into risk and reward these days, and technology has allowed us to get instant quotes and fills in the blink of an eye.

For the new options trader, it all starts with opening your first options account. The good news is that opening up an options account online is quick and easy.

But before you get to that step, there are a few things you need to understand first...

How to Profit from a Pattern Few Others See

how to invest

In a moment I'm going to show you a chart for EOG Resources.

As I looked at the chart for this oil and natural gas development company, and positioned myself for a possible trade, an old song happened to come on the radio. It's a catchy tune that my friends and I used to "try" to dance along with.

Fast-forward to today, and as the song plays in my head, I'm almost moved to dance again by the profit pattern I'm seeing develop for us on this chart!

Options Trading Strategies: What You Need to Know About LEAPS, Spreads and Straddles

There are hundreds of option strategies. And they can be vastly different in terms of tactics and desired outcomes.

But in fact, there are really only a few basic strategies, and everything else is built on these in some form. This range of possible strategic designs is what makes the options market so interesting, challenging, profitable... and also nice and risky.

Are you surprised by my characterization of risk as "nice?"

Well, "risk" and "opportunity" are really the same thing, and every option trader needs to accept this.

Because if you want to go fast and get some serious movement, well, you have to climb on board the rollercoaster first, even if it scares you a little bit.

In my last options trading strategies article I took the mystery out of long calls, long puts, covered calls, short puts and insurance puts.

But the truth is those are only five of the eight general strategies (and "families" of strategies) we use here At Money Map Press.

Today I'd like to tell you about the final three, explaining what you need to know about LEAPS, spreads, straddles.

Let's get started with LEAPS.

Understanding LEAPS Options

This strategy can be an attractive alternative to the otherwise very short lifespan of most options. And the potential for gains in either long or short LEAPS trades is substantial.



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Options Trading: How to Read an Options Listing

Ahh, the options listing... Trust me, it isn't as bad as it looks.

It starts with understanding a rather long set of symbols that looks something like this:

GOOG120317P600000

This code is simply the ticker symbol for your option. And once you break it down, you'll find that it holds a wealth of information, including all the "standardized" terms we talked about in this article.

The first three or four letters are just the stock ticker for the specific underlying stock, in this case, Google Inc. (NasdaqGS: GOOG):

GOOG
120317P600000

The next two digits tell you the year the option expires. This is necessary because long-term options last as far out as 30 months, so you may need to know what year is in play. In this case, the Google option is a 2012 contract:

GOOG120317P600000

The next four digits reveal the month and the standard expiration date. The expiration date does not vary. It's always the third Saturday of the month. And the last trading day is always the last trading day before that Saturday, usually the third Friday (unless you run up against a holiday). In this case, you've got a March contract (03). And the third Saturday of March 2012 is the 17th.

GOOG120317P600000

Now you'll see either a C or a P, to tell you what kind of option you're dealing with - a call or a put. This one happens to be a put:

GOOG120317P600000

After that comes the fixed strike price, which is 600:

GOOG120317P600000

Finally, any fractional portion of the strike is shown at the end. This comes up only as the result of a stock split, where a previous strike is broken down to become a strike not divisible by 100:

GOOG120317P600000

Now that you're a pro, let's take it a step further.

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Options Trading: The Most Important Piece of Advice for Beginners

Here it is. The most important piece of advice I have for anyone thinking about options trading.

Don't let the red tape hold you back.

A lot of experienced and sophisticated investors shy away from anything that involves paperwork.

They think they're not qualified or ready, or simply that it's not worth the trouble.

Don't be one of them.

Yes, you will have to fill out an options application with your broker, but it's easy.

In fact, you had to file a similar form just to open your trading account in the first place. Now, if you want to upgrade your account to be "options approved," it's just another small step away.
Admittedly, the application may look intimidating at first glance. It is full of disclosures, legal qualifications and the kind of small print that is worrisome.

Yet the purpose of the application is simple enough.

Your broker just wants you to state that you know enough about options to make your own trading decisions.

And not to worry... It's not a quiz.

The disclosures are designed to gauge your level of experience. But their real goal is to let the brokerage firm off the hook in case things go terribly wrong. Of course, that's not going to happen to you.

But if a broker lets anyone trade without at least appearing to check them out first, they could be liable for your losses. And no one wants that.

Because options are by definition speculative, the New York Stock Exchange (NYSE), Financial Industry Regulatory Authority (FINRA), and National Association of Securities Dealers (NASD) all have rules and policies about "suitability."

That's the real reason you have to go through this (very small) hoop.

So you'll fill out the application. They file it away into the "just in case" drawer and you're ready to trade.

What's on the Options Trading Application?

The options application will ask some questions you would expect: Name, address, employment and employer name, annual income and all sources of income. They also want to know your net worth and liquid net worth, marital status and number of dependents.

Then there are a few questions you might not expect.

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Options Trading Strategies: Slash Your Risk and Make Money

If you feel like Alice in Wonderland when you start to look into options trading strategies, you're not alone.

Even so-called "experts" struggle with options. It gets even uglier when they attempt to bring it down to earth for their readers.

Yet, if anyone can do it, I can.

I've written six books about options, and have been trading options myself for more than 35 years.

It means that I have already made every mistake in the book so you don't have to.

So why should you learn about and invest in options?

Done right, you can use options to create a virtual cash cow - often quickly, and often with very little risk.

Options Trading in Action

Consider the case of the SPDR Gold Trust (NYSEArca: GLD). A year ago, GLD shares were trading for about $130.

Say you felt pretty confident GLD was going to go up in the next 12 months. You could have gone "long" GLD by buying 100 shares.

Of course, you'd have to be ready to plunk down about $13,000 for them. But if you had that kind of cash you would have done pretty well.

A year later, GLD was trading at $160, and your 100 GLD shares were worth $16,000. That's a nice 23.7% gain.

But you would have done even better if you had used options.

Let's say, instead, you bought one $135 call. (A "call" is just a bet on the price of GLD going up from $130; the same thing you're betting on when you buy the stock.)

A year ago, GLD calls were trading at $9.00. So you would have spent about $900 to initiate the trade. Yet by the expiration month, the price of the calls had risen to $28.00.

That means the price of the option "contract" you bought was now worth $2,800-giving you a 300% gain on the very same price move in GLD.

Now where I come from, 300% is much better that 23.7%. That's the power of options.

And there's more...

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Options Trading: Three Ways to Win Big with a Bearish Calendar Spread

Think some of Wall Street's higher flyers look vulnerable to a broad market pullback?

If so, they could be perfect candidates for a low-cost, low-risk options trading strategy that could pay off big time if we get another move like last Friday's 169-point Dow plunge.

The strategy is called a "calendar put spread," and it works like this:

  • You sell a slightly out-of-the-money put option with a strike price just below the current market price of the underlying stock - with a near-term expiration date.
  • You then simultaneously buy a put option with the same strike price but with a more distant expiration date.
The cost - and the maximum risk - is the difference between the two option premiums, referred to as the "debit" on the spread. But because the longer-term put you buy "covers" the shorter-term put you sell, there's no added margin requirement.

It may sound complicated, but it's not once you understand how to employ this bearish options trading strategy.

Options Trading Primer: A Potential 900% Gain in Six Weeks

Here's how a bearish calendar spread might work with Exxon Mobil Corp. (NYSE: XOM), which has held up better than many other oil stocks in recent weeks, closing last Friday at $84.57, barely $3.00 off its 52-week high:

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An Options Strategy That Will Save You Some Money

Whether you credit a Santa Claus rally, an early January Effect, or some other driving market force, there's no disputing the strong finish posted by stocks in 2011 - or the healthy 2012 opening advance added in the first week of January.

To be specific, stocks - as measured by the Standard & Poor's 500 Index - rose from 1,204.00 at the close on Monday, Dec. 19, to 1,257.60 on Friday, Dec. 30, then jumped to 1,280.15 at midday yesterday (Monday), a gain of 6.32% in just three weeks. The Dow Jones Industrial Average did almost as well, climbing from 11,751.96 on Dec. 19 to 12,398.29 in Monday trading, a 21-day gain of 5.50%.

While those short-term moves are certainly impressive, they're hardly unique in today's volatile market environment. Three similar advances have occurred in the past five months alone - in late August, early October and late November - but each was followed by a sharp short-term pullback that wiped out much of the value gained in the rallies.

And, while few things in the market are certain, there's a strong probability this current market advance will also be followed by a sizeable retracement in the very near future.

So, how do you protect your most recent gains?

One answer is to turn to the options market.

A Defensive Options Play

As veteran Money Morning readers know, two of the most effective and often-used strategies involving options are writing covered calls to bring in added income and buying put options as "insurance" against possible price pullbacks.

As such, investors would typically look to the latter strategy - buying puts - for protection in the present market situation. However, there are times when unusual conditions can force investors to take an alternative approach to option strategies - and that has certainly been the case recently, thanks to the market's extreme short-term volatility.



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