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Fellow Investors & Traders,
Today we are going to talk about another important subject dealing with
the “Open Stock Option Position”!
“How to use Contingent Criteria
Triggers to close your Stock Option Positions Automatically!”
Taking an “Open Position” (that
means buying the stock or stock option) is just the first part of
your profit planning investment strategy. The most important part
will be when you actually “CLOSE” that particular position. That is when
you either take your “Profits” or limit any potential loss.
Most of our Investment Group Members
work full-time jobs (as you probably do too) – and do not have time
(or not allowed) to login to their online accounts during the day.
With these type contingent trigger
orders you can specify a set of instructions that will execute
automatically to open or close your stock or stock option positions.
This strategy is an expanded version
of the “Limit Order” process, which gives you more flexibility to
customize the way you can close out your positions.
You can set them up in the evenings
from your home computer, on weekends or anytime that is convenient.
Here is the best way to use this
strategy:
Our Investment Group Members look
for a lot of good stock option opportunities ahead of “company
earnings”, any special
upcoming company events (such as “stock splits”, technical conferences or special product announcement
that the company sets a pre-announcement date). Generally stock and stock
option prices trade higher just before these type of events take
place. That is the best
time to buy into a position. You can setup special instructions to automatically
close your positions (some of them or all of them) just before the
event. That is the best way to lock in your profits!
Here are the steps to take!
1. Do your
research and find a stock you want to buy that has company earnings
coming up this month. Make a note of the “earnings date”. Look at the
available stock options and decide which stock option you would want
to buy. This is your
“Planning” step! Click
Here! to see my top buys list! Stock Option prices fluctuate
depending on what is going on with the company, and the overall
market trend. You have to
track your potential stock option prices, review what is going on
with the company and the overall market at the time you are
considering taking a stock option position. (Example: I
like to buy MSFT (Microsoft Corp.) stock options prior to their
earnings report. That is when
the most significant upward price movements happen for most companies).
2. Buy the stock
option (Buy To Open) that is (in-the-money) closest to the actual
share price. If that
particular stock option price is more than you want to spend, buy the
next stock option up. You
will spend less for the premium (cost), but you give up a higher
increase in profit when the price starts to move higher.
Nevertheless, just get your position open ahead of the earnings or
event date and you will be in position to make a profit as the price
trades higher. This is your “Timing” step!
3. Once you have your position open,
you can decide at that point what type of condition you want to
specify. The best scenario
after a good run up in price ahead of earning is to set your
contingent order to close (Sell To Close) your positions (some of
them or all of them) the before the market closes the day before the
earnings news is to be announced.
Example. If PCLN
(PriceLine.com) is due to report earnings on 10/15/07, then you want
specify your instructions to close your positions on 10/14/07 at
2:50pm CST as a “market order”. The reason you select “market order”
is to make sure it gets executed immediately and closed (“Filled” is
what the order status will actually say when executed) so that you
have locked in your profits or limited any potential losses.
Once you setup your instructions in
the “Contingent Order” you won’t have to worry about it – the system
will handle executing your order based on what you specified and you
can check on it at your convenience later that day or in the evening
when you have time.
One of the reasons I recommended “OptionsXpress.com”
is that they allow you to place specific contingent trigger orders
based on price, date and even a specific “time” of day! That is the type of flexibility
you want with a brokerage firm – and it gives you a wide range of
choices for most any situation you have.
I have used these type instructions
several times to close out positions and lock in my profits – and you
should implement the same strategy to help lock in your profits if
you have stock or stock options positions ahead of company earnings
news and no access to your online account during the day!
Click
Here! to see a example screen for one of
my initial Contingent Option Orders.
Click
Here! to see the verification screen for
one of my initial Contingent Option Orders.
As I mentioned before – planning and
timing are 2 of the most important factors to making good profits in
the stock market. Your research
is the other – so spend a little time preparing your plan and get in
position ahead of the company earnings report news, take your profits
before the earnings news is announced (lock in your profits with a contingent order) and you
will do well.
If you follow my weekly M.T.T.
Quarterly Newsletter you will get some good investment ideas to
consider and help with your planning and research strategy.
If you have any questions about
using the contingent order you can send me an email message – I will respond
as quickly as I can!
Another great article I have written
that you should most definitely review and implement is also located
in this FREE Education section. “One Of The Best Stock Market
Strategies”. If you have
not already read it – You Must Read It As Soon As Possible. “Today”!!!! I wrote this article because this
is the best plan that I have used to get the most profits from my
stock purchases and stock option buys! It works every month!! Once you get started and practice
implementing this plan every month, it will become easier to
understand and find good buy opportunities.
Just like other strategies – “It’s
All About Timing” – and Planning! That is the key to getting in position to take
advantage of stock price movements whether you are buying the actual
stock shares or the stock options.
You have to look for the opportunities -- using my weekly newsletter
information can help you get started with your Due Diligence and
Research. These are the
companies that I buy throughout the year!
You need to have a good, simple,
easy to use stock price calculation program that quickly performs all
of your potential price calculation scenarios so you will see first
hand what your projected costs, percentages, gains or potential loss
would be before you place your buy transactions. My stock price calculation program
is an excellent tool to handle all of your stock price calculations
quickly and easily.
You can take the 7-day FREE Trial to
play with the calculation tool, then order your full version copy to
have for a complete program of tools for all your future buy
opportunities. Click here! To see all of
the Software Program Advantages!
If you have not taken the 7-Day
Free Trial! Download your free copy today -- play around
with some calculations and see how much simpler the program makes all
of your cost, profit and exit planning calculations.
See the 7-Day Free Trial link on the
homepage!
www.newstocksoftware.com
If you have any
questions or need some “one-on-one” guidance to help with your
research and planning, let me know – I will respond as quickly as I
can!!!!
To your
success!
Jimmie V. Smith
markettrading@juno.com
Copyright 2007
Market Trading Technologies
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