Our Money Morning experts put together a list of the best investment strategies for 2016.
Investors can't afford to not have the best investment strategies available right now.
The Dow Jones Industrial Average is down nearly 9% this year. And at 15,963 as of Feb. 12, the Dow is only about 12% higher than it was during the 2008 financial crisis.
Here's how our experts are navigating these difficult times...
The beauty of options is that they're so versatile. You can use them to make money when stocks are going up or down. They can make you steady income or huge windfall gains.
For instance, you can use the bull put spread I showed you to dominate minor upward market moves.
And when the market is edging down, remember the bear call spread we talked about.
Both of these strategies are great to use when wanting to further leverage your cost of an option trade beyond buying calls or puts.
But there's one thing we haven't talked about yet: how to play a flat market.
You can use this strategy to make money when no one else is.
It's called the "iron condor," and here's how it works...
Starting next year, three of the biggest exchanges in the United States will no longer allow investors to place stop-loss orders on their trades.
So what are you - the average retail investor - to do? How are you supposed to protect your capital and your profits?
Let me offer you a few considerations that will help you (and the capital in your account) survive this move by the major exchanges.
Investors pulled almost $40 billion from stock markets last quarter alone, according to Morningstar. That's nearly 50% of everything taken out for all of 2015.
But here's the thing... no matter how grim the global situation is or even becomes, indiscriminately selling is exactly what you don't want to do.
It's one of the worst possible decisions any investor can make and, ultimately, one that will cost investors billions in lost profits.
There's no shortage of stock charts out in the wild. These days, anyone can go and pull up highly customizable charts for pretty much an stock trading on domestic markets.
There's so much information available it can be completely overwhelming, even if you've been trading for a while.
Today, I'm going to share with you my favorite type of stock chart and give you everything you need to start seeing your trades like a pro.
In options trading and investing, as with any business you're in, you want to turn a profit.
When things are going great and profits are coming in, the business is thriving. When things take a turn for the worse, your winners come less frequently, and your profits become smaller.
That's when things can get really ugly. But just like in any business, it is how you deal with losses that matters.
When trading options, there are several factors that affect price - not just the value of the underlying asset.
The variables that exist that account for the fluctuations of an option's price movement are known as the options "Greeks," and we've covered many of these.
I've told you that delta - how an option's price will move with price movements in the underlying - is the single most important factor in determining an option's price.
Today's "Greek" shares a special relationship with the delta. I like to call it the "delta accelerator."
Here's what I'm talking about...
Volatility has a huge impact on options pricing, and you need to understand the mechanics of how that happens and what it means for your money.
This options trading lesson is crucial - you'll learn how to find stocks with a chance to make big moves... and how to identify potentially lucrative options plays to profit on those moves.
We're going to explore in detail the "Greek" that measures changes of an option's value based on how much the implied volatility on the underlying security changes.
There's one eensy number that every pro trader checks out when they're doing their "homework" before picking a trade.
They clean up on those trades, and now, so will you...
You see, we know that the options on the stocks that have a $0.05 or less bid/ask spread, like you find on the CBOE Penny Pilot list, give you the best chance at making the most money on the smallest price moves.
And we know that picking an option with the lowest "percent to double" gives you an easy shot at doubling your money when you want that to happen.
But now I want to show you how to use one number to pick the options that will move in your favor when the stock you're trading moves in price before you enter the trade.
What's the true measure of a trader's success?
Last Tuesday, I told you that two of the most important things you can do as a trader is to build a plan for every trader, and to stick with that plan through the end of the trade.
But before you can build an effective options trading plan, there are three rules you need to consider.
Let me show you what I'm talking about...
So here we are, heading back to 18,000 on the Dow Jones Industrial Average after dipping below the 15,500 mark back in August, a 2,500 point move up.
There's a good chance you're wondering how to trade the market at these levels. I'm going to tell you.
If I'm wrong and there's no market sell-off, we lose a little money. If I'm right, you'll make a boatload of dough.
There is an old adage that traders are told to live by that goes, "Plan your trade and trade your plan."
There should be a follow-up to that one that says, "Stick to your plan no matter what."
Beginning and experienced traders alike seem to get something in their heads that makes them change their original trading plan.
That's one of the worst mistakes a trader can make. Here's why...
The mindset of short-term options trader is to get in, get out, and turn profits quickly - typically, the more efficiently you can use your capital, the better.
But for those from a long-term, buy-and-hold background, this short-term, options-based way of generating income can be a lot to take in.
So today, I'm going to show you a long-term options trading strategy sure to boost your portfolio...
A lot of folks - especially individual investors - don't like to bet on stocks that are going down. That's understandable. It doesn't feel as good to bet against something.
But it would be prudent for investors to hedge their gains of the last five years; trees don't grow to the sky, especially when their roots are rotting.
Many of the options trading strategies I have shown you have been directional trades. That means the option position requires the underlying stock to make a particular move in price - either up or down - for the trade to work.
But how would you like a strategy that allows you to place a trade that doesn't care which way it moves, just so long as it moves?
That's what I'm going to show you today...
