BOSTON, Jan. 3, 2012 /PRNewswire/ — Eaton Vance Tax-Advantaged Bond and Option Strategies Fund (NYSE: EXD), today announced important information concerning its distribution declared in December 2011. This press release is issued as required by the Fund’s managed…
PR Newswire: Financial Services
HOUSTON, Oct. 28, 2011 /PRNewswire/ — Winning Strategies has clarified that Muriel “Mickie” Siebert, Chairman and President of Siebert Financial Corp., supports the Volcker rule, rather than advocating its repeal as Winning Strategies previously and erroneously reported.
Tim Connolly,…
PR Newswire: Financial Services
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HOUSTON, Oct. 27, 2011 /PRNewswire/ — Muriel “Mickie” Siebert, President of Muriel Siebert & Co., Inc. will appear on “Tim Connolly’s Winning Strategies” on Friday, October 28 at 12:00 p.m. CT. Ms. Siebert will discuss her campaign to repeal the Volcker Rule. The Volcker…
PR Newswire: Financial Services
NEW YORK, Oct. 27, 2011 /PRNewswire/ — Reportlinker.com announces that a new market research report is available in its catalogue:
Power Wheelchair Market Shares, Strategies, and Forecasts, Worldwide, 2009 to…
PR Newswire: Financial Services
PLANO, TX–(Marketwire – May 10, 2011) – e-Rewards, Inc., a global leader in digital data collection and reporting, today announced it has reached an agreement to acquire Conversition Strategies.
Marketwire – Mergers and Acquisitions
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StreetInsider.com News Articles
DENVILLE, N.J., Aug. 25 /PRNewswire/ — Micro Strategies Inc. is pleased to announce its expansion into the Philadelphia metropolitan area with the planned opening of an office and Technology Solution Center in the fourth quarter of 2010.
The new facility in Malvern, Pennsylvania, represents a multi
PR Newswire: Financial Services
Have you ever been on a spinning circular ride, the kind that starts out slow and then builds up speed. You try to get into the center and hold on as long as you can. Eventually, the ride is going so fast, that everyone gets spun off. Luckily the ride is set on the ground with padding all around. This helps to cushion your fall.
Stock option trading is somewhat similar to that ride. Due to the time decay, eventually everyone gets spun off of the ride. The problem is that often there is no padding to cushion your fall. All stock options have an expiration date. This is always the third Friday of the expiration month. All riders either have to roll their options over or get off at this time.
It is important when you begin to trade in options that you have an exit strategy in place. If you do not, you stand a good chance of losing your money. Trading in options is simply too emotional and you will let your heart take over your head. You just think that if you ride it a little longer, you will be able to make more money. The problem is that the ride always comes to an end and you may not have enough time to make the amount of money your emotions tell you that you should be making.
The first thing you should remember with trading in options is the time decay. Just as the ride accelerates in speed so does the option price decay as the expiration date gets closer. This time decay enters enormous speeds the last two weeks before the expiration. If you have not already gotten off the ride before the last two weeks, then you should seriously consider getting out then.
Having a stop loss in place is an important strategy. If the stock price goes down 20 to 30 percent, then your stop loss will help you to avoid losing more money. You can then count your lucky stars that you did not lose more money than that. If you do get out, do not look back. It is best to go forward to the next opportunity. One rule of thumb is that if you have seven losses in a roll, then you should probably think of quitting trading in options.
Another thing you should determine ahead of time is how long you expect to be involved with this stock option. As I said, the last two weeks are the killer so you should probably plan on being out by then. Therefore, a one month option may not work the best. This only gives you a few weeks to make your money from the investment. Having an idea of how long you will be in the trade will help you to take your lumps or profits and move on.
A few other exit strategies consist of closing out and rolling. If you own a call and the stock price is in the money, then closing out merely involves taking your profits. If you own a put and the stock price is below your strike price then closing out involves purchasing the stock to cover your put. Out of the money trades also involve the same strategy, but are not so happy.
Rolling your stock involves the process of closing out of your current position and opening up with a different term or strike price. With rolling you can either roll vertically, within the same month, or horizontally, across the months. Rolling involves taking the losses for the current position and hoping to make it up with gains on the new position. It does cost additional funds to roll to another position. Unless you really feel strongly about the underlying security, rolling may not be the best strategy.
Being smart with your trading strategy will help you to make money with your stock option trading. Having a well established exit strategy at the time of your entry to the trade will help you to not have to fret about your decision of what to do.
All of the content published on this website is to be used for informational purposes only and without warranty of any kind. The materials and information in this website are not, and should not be construed as an offer to buy or sell any of the securities named in these materials. Trading of securities may not be suitable for all users of this information.
Albert Einstein said “The significant problems we have cannot be solved at the same level of thinking with which we created them”. This can be applied to many different problems that we encounter in our lives. However, in applying it to our investing strategy, we need to remember that if we continue to invest money the way we have always invested it, then we will continue to obtain the same result. What we need to do as investors is to find a different strategy, unless the one we are using is working for us. Then it would just be more of the same.
A couple of things that have been attributed to Warren Buffet are “it’s far better to buy a wonderful company at a fair price than to buy a fair company at a wonderful price.” He also said “Rule No. 1; Never lose money. Rule No. 2: Never forget rule number 1″. I feel that what that means is we should be on the lookout for wonderful companies that we can purchase stock in, at a reasonable price. If we do that then when the price of the stock goes up, so will our profits.
I think what we also need to do as investors is to learn to think outside of the box. To think outside of the box you have to first of all, define what the box is. After we define the box’s parameters, then we can learn to think outside of those parameters. The box is defined as the normal way of looking at things, doing things and all of the routine assumptions that everyone is making about a subject. The best way to begin to think outside of the box is to challenge all of the assumptions that are being promulgated by everyone who discusses the subject.
The hard part of challenging these assumptions is that of obtaining a listing of the assumptions. You should begin by listing every assumption that you can think about of what people have said it takes to make money in the stock market. Do not be afraid to border on the absurd. For instance, the buy low and sell high assumption. Is there some way to think outside of that assumption and still make money with your investment strategy? If you can come up with a solution to that problem, you will probably find yourself quite rich.
Some unusual methods of making money with your stock investing include buying gold or silver. These commodities are wonderful things to own when the stock market is unstable. They do not lose their value in this environment. However, they will lose their value when the market stabilizes. So you will want to keep your eye on the situation. If you do decide to invest in gold or silver, you can choose to buy either coins or bullions. One rule of thumb, is to never invest in futures. You will always lose your investment with futures, even gold futures.
Buying or selling options is another methodology to make money with your investments. You should probably never do a naked transaction, that is never act on an option with no support. Their are many different strategies including straddles, calendar spreads, strangles and others. There is information on this site about investing in options. Buying hedges are another way to make money with your investments. It is important to understand these strategies fully before trying them out. Do some research. Ponder the standard assumptions and learn to think outside of them. It will be worth the time you spend doing this exercise.
All of the content published on this website is to be used for informational purposes only and without warranty of any kind. The materials and information in this website are not, and should not be construed as an offer to buy or sell any of the securities named in these materials. Trading of securities may not be suitable for all users of this information.
