- The One “Timing” Lesson You Need Now About Trading Options
- Pick the Stock, Mark a Date on Your Calendar… and Collect Clockwork Profits
- Oil's Tumble Means a Fast 30% Gain with This Trade
- This Overlooked Gold Play Could Bring Us 115%
- How Apple Stock Made Us as Much as 175% (While Wall Street Barely Made 3%)
- The Power of the Loophole Trade
- Why Earnings Season Is the Most Wonderful Time of the Year for Traders Like Us
- Grab Triple-Digit Returns on the Euro's Freefall
- A "Euro-Proof" 50% Gain in Less Than a Month
- How Halliburton (NYSE: HAL) Gave Us a 70% Return in 3 Days
- How to Double Your Money with This Expert's Trading Secrets
- The Key Steps to Your First Options Trades
- How to Profit from a Pattern Few Others See
- Options Trading Strategies: What You Need to Know About LEAPS, Spreads and Straddles
- Options Trading: How to Read an Options Listing
- Options Trading: The Most Important Piece of Advice for Beginners
My wife and I were just at a children's birthday party. You know, the kind where everyone gets together to sing "Happy Birthday," and then the adults drift off into their own groups to chat.
Naturally, I fell in with a group of several wealth managers, and you'd better believe we started talking about the markets.
When the subject turned to oil shares, you could have heard a pin drop.
You see, some of those folks could be looking at a mighty lean year, depending on their oil exposure.
But as we know, there's an opportunity to make money as share prices fall. Today I want to show you how to book a quick and easy 30% gain on some very big, very liquid oil shares, even as the stock tumbles down.
I love gold right now, not despite, but because of everything that's happened to it this month...
Now, it's true that the "race to $1,000" triggered by the July 20 Asian bear raid appears to have the yellow metal on the ropes.
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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%.
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.
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.
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.
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.
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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.
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.
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.
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.
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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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It starts with understanding a rather long set of symbols that looks something like this:
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):
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:
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.
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:
After that comes the fixed strike price, which is 600:
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:
Now that you're a pro, let's take it a step further.
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.