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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.
Options Xpress has a
really good feature as part of the “Advanced Order” function called
the “Contingent Order”. With
these Contingent 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 technical conferences
or special product announcement that the company sets a
pre-announcement date, after special holidays). Generally stock and stock option
prices trade higher just before these type of events take place, and again
after a major holiday. 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 AAPL (Apple Inc.)
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 higher stock option strike price. 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) 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 15th of the
month, then
you want specify your instructions to close your positions on the 14th
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 of contingent order 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 open positions 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 two 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 any special upcoming events. 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 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, or contact the Live Help at
OptionsXpress.com! They have
really good support help and can answer all of your questions!!
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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