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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.), one of my top
buys for stock options.
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, C, 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 2010 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.
· 6.
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 2007
Market Trading Technologies
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