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Fellow Investors
& Traders,
Want to know how the Rich get Richer? One advantage that big money makers
in the stock market have over individual investors is the knowledge
and use of buying “Stock Options”! Have you ever wanted to get more
information about how YOU can learn about “Stock Options” and start
to apply stock option strategies to your investment portfolio? Well -
I’ll tell you exactly what I did and where I got the “FREE” online
information so you can too!
One of the best places I have found on the Internet that gives you
complete FREE courses of Information on “Stock Options” can be found
at the following website address:
www.888options.com
There you will be
able to take the free online classes (Basics to Advanced) that will
give you all the details about what stock options are and all of the
terminology, right from your own computer! You can take these classes
at your own convenience, anytime you want!
For now, just concentrate on the “BASIC” strategy,
buying simple “CALL” options and simple “PUT” options. Don’t worry
about understanding some of the more complicated strategies such as “Straddles”,
“Butterfly” and “Credit Spreads”! Just keep it simple and you will
have much more success.
Here is what I did (and still do)!
In the evenings (after work and weekends) I would go to the
www.888options.com website and spend some time reading the different
classes and information. Starting with the “Basics” first! This is
what you need to do first also! Get a good basic understanding of
“Stock Options”. (The information is free and the only cost is a
little of your time).
Next, I started looking for good solid companies to invest in that
offer “Stock Options” which I could buy as an Individual Investor
through my online brokerage account.
Click here! To
see my own list of stocks!
When I found a few companies I was interested in - I
wanted to know how much “Volume” those companies generally had on a
regular basis with their stock options. That is an important factor,
because you do not want to buy stock options in a company if there is
no investment interest in their stock options - so always make a note
of the volume activity as part of your research.
How do you
find the volume information? You look up the “Chain” quote for the
specific stock option symbol to see the overall volume, then you can
look at the “Historical Data” information on each individual stock
option “strike price” symbol!
Click here! To see an example of what the
“Chain” quote looks like for MSFT (Microsoft Corp.).
Now, look for 2 - 5
other companies that you would like to invest (see my list for some
considerations) and use the “Quote Details” of your online brokerage
account to check out their stock options activity! If you do not have
an online brokerage account setup - I would recommend “OptionsXpress.com”.
I also have an account with them - they have some great features and
supporting tools that are just right for buying stock options for
individual investors.
Next, do your research (Due Diligence) on the companies you have
chosen. This will help determine if it is worth your time and effort
to invest in the company!
Here is a couple of things to consider:
· Is
the company one of the top companies in their business sector?
· Is
their product or service in demand in the business market?
· Has
there been a significant amount of “price movement” in the share
price?
Here is the most important fact!!
Unless there is “price movement” you will not make any
significant money in the stock market! You want to position yourself
when you buy the stock (or stock option) so that you take advantage
of the stock price movement at the most opportune time (when the
price is more likely to trade higher).
When is that time?
Just before any significant special events or the company is due to report their quarterly earnings.
Generally 1 to 2 weeks before the quarterly earnings date the stock
price starts to move more frequently! That is the best time overall
to buy a stock or stock option!!! Stock prices have the most
consistent movement during this time frame! If you are already in
position (have bought the stock or stock options) before the stock
price starts to trade up, you will have a better chance of making a
good profit!
Another important factor to consider in your evaluation of which
stocks to invest, is the “Characteristics” of how each particular
stock trades on average! Does the stock price rise or fall quickly
during the week or does the stock price stay relatively around the
same price (within a few dollars over a months time frame)?
Example, Oracle Inc. is a good solid company, but most of the time
you will not see a big price swing up or down. Gradually the price
will increase on good earnings or reaction to positive news events,
but that is about it -- it's considered a "slow mover".
Google Inc.,
is another good company that has "big price
moves" just about every week -- it's considered a "fast
mover".
So, you need to understand the general characteristics of price
movement for each company to help determine your buying strategy,
when to buy and when to take profits to lock in your gains!
On the other hand - If you are a “Long Term” Investor (planning to
hold your positions for years at a time), you probably will not be to concerned about price movement and should look
to have positions in “dividend” paying stocks that generally do not
have much price movement swings! That way you will capitalize on the
“quarterly checks” instead of profit from the shares themselves. You
can use my stock price calculation program to help figure potential
dividend payouts and how much you would have to spend to receive any
significant dividend payments.
My best advice is, do not buy a volatile stock if you are dividend
investing - stick with the good solid slow price moving companies.
(Example -- INTC, PG, JNJ, GE, JPM, MSFT).
If you have not read my other Topics “One Of The Best Stock Market
Strategies" and "How To Buy Your First Stock Option
(Step-by-Step Plan)", I think you are ready to get started!!
Lastly, I just want to say -- I’m just like you - an Individual
Investor (with a little more experience). I buy stock options just
about every week (when I see opportunity) and what I am telling you
is pure “Fact”, because I do it myself every week.
Don’t be afraid to “Take Some Risk” - after all, when you drive to
work everyday you take the same sort of
Risk, except you understand how to handle that Risk by following
certain rules and directions.
The same philosophy applies to stock options. Once you
learn to follow the rules, you can also limit the risk to ensure you
make it to your goal for good profits with stock options! Try to buy
at the opportune time (when it is likely the stock price will be
moving higher - around earnings time) and take some profits when you
make a good gain! It is not likely that every one of your investments
will turn out to be a winner - do not let that discourage
you. Keep after it -- move
on to the next opportunity and you will understand how to make the
necessary adjustments to recover from any loss that you may
experience.
As I mentioned
earlier -- "It's All About Timing"! Sometimes your timing
will be off and you will buy into a position at the wrong time --
when that happens....take a quick loss to free up your money -- then
you can recover quickly later on or buy into another company position
with the funds you still have!
Just to recap, here’s what you
do:
· 1.
Take the FREE online classes at www.888options.com.
· 2.
If you don’t have an online account already setup - Get that setup as
soon as possible. I would recommend “OptionsXpress.com” (I use them
also)! You can start with $250 - $2500.
· 3.
Do your research (see my Due Diligence article) - Find a few solid
companies that offer stock options (Pick 2 - 5) My Top 2012
Investments List is a good start (see the FAQs section).
· 4.
Get your copy of my “Simple, Easy, Stock Price Calculation
Program” so you can have all the tools you need to help easily
calculate your prices.
·
5. Find out when those companies are due to report
quarterly earnings. Look to buy your stock options 1-2 weeks before
the earnings, take the profits after a nice run up in price before
the earnings news is released to the public. This is how you lock in
those profits! You can always buy it back if the probability that the
price will continue to move higher is still positive.
Sometimes companies can have great quarterly
earnings and meet all expectations, but then the “future guidance
forecast” or some other negative news is released at the same time
and the stock price could drop significantly! If that happens to your
positions, all of your gains will be lost - so the best thing to do
with this strategy is “Don’t Take That Chance”! If you buy the
shares or the stock options before the earnings date -- lock in those
gains ahead of the earnings news! Take your profits while you have
them. Another opportunity will
come again when the price trades back down! That's the safe approach
to keeping your funds available for another opportunity!
You can follow my weekly quarterly earnings newsletter - practice
good stock price and stock option calculations with my “Simple,
Easy, Stock Price Calculation Program”.
Click here! To see all
of the Software Program Advantages!
To your success!
Jimmie V. Smith
markettrading@juno.com
Copyright
2011 Market Trading Technologies
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