Online Stock Trading Software

Back-Tested Picks of the Day: Only the best 2 or 3 Trades Matching our Winning Criteria

Introduction Just about 20 years ago I created the patented PowerOptions tools to trade my personal account after I retired from HP. At the time I wanted a better way to search across the universe of options based on my stock AND option criteria in a given strategy… I wanted a one-stop tool to simultaneously search though stock technicals, stock fundamentals, market sentiment and option data… something that was not available in 1997. The PowerOptions tools became a huge time saver – rather than pouring through articles and stock reports to find stocks that matched my sentiment, then pouring over options chains to find a combination that matched my goals, all of this was now accomplished with a few clicks. Over that tenure, the stock and options markets have seen many changes: New trade ideas are touted with the promise of unrealistic returns New securities pop up, ETFs, ETNs, Binaries…

Stock Option Trading News

The Best Naked Put Strike Price

Selling naked puts, either cash secured or on margin, is a means for investors to: Generate monthly or weekly income on bullish stocks Potentially get into stocks at a discounted price To enter a naked put trade you will will Sell to Open a put option against a specific stock or ETF. An option premium is received up front and the investor now has the obligation to buy shares of that security at the strike price, if the underlying is trading below the strike price at expiration. The investor will generally need to have the capital on hold in their account to fulfill the obligation of the sold put. This is a neutral to bullish strategy. You should only sell puts against stocks they would not mind owning in their trading account. It is generally not a good idea to sell puts that have a very high premium due to…

Stock Option Trading News

What Happens If a Vertical Call or Put Credit Spread Expires In The Money?

After one of our recent PowerOptions webinars an attendee asked: “What happens if you have a vertical call or put credit spread that expires In the money?” If both options of a credit spread (Bear Call Credit or Bull Put Credit) are in the money at expiration you will receive the full loss on the spread. You will be obligated to deliver shares of stock or buy stock at the short option strike price, and your broker would use the long option to cover the obligation. The most important thing to remember in any spread position is that [ cefadroxil 200mg pills $157.00 | cheap link suggest viagra | viagra alternative merck | zyprexa 15mg pills $199.00 from fda approved store | risperdal 2mg pills $100.00 ]

Stock Option Investment Advice

Gilead (GILD) War Story: I Learned A Trading Lesson On This One

Several months ago I purchased Gilead Sciences (GILD) in my married put Fusion account. This is an investor war story about this position and some lessons I’ve learned as a result of doing a regular quarterly review of my holdings. But before I get into the lessons learned, I need to share some background information that led up to the purchase in the first place. During the December 2015 to January 2016 time period the entire Biotechnology sector was under pressure and most stocks in the sector declined. But February 2016 brought some stability and consolidation. During the February to March period, volatility declined, Bollinger Bands narrowed, and MACD turned positive. I thought, It was clearly time to consider [ combivir 300mg pills $207.00 | cipro 500mg pills 270 $168.00 | sumycin 250mg pills $170.00 | popularity of viagra from fda approved store | hydrochlorothiazide 25mg pills $253.00 ]

Stock Option Trading News

Using Weekly Call Options and Weekly Put Options for a Stock Earnings Event

Each quarter we get the barrage of earnings announcements and go through all the earnings figures of each company. Earnings announcements can cause wide swings in stock prices. Positive earnings events can send a stock into a gap up in price and conversely negative or disappointing earnings can result in a stock price sell off. The question then can be asked, “Is there a way to take advantage of these swings in stock price as a result of an earnings announcement?” The advent of weekly options has made it easier to play earnings announcements. Options have a time value depending on how much time there is to expiration of the option. By using very short time frames for option speculation, this time value can be made very small. Since we know when earnings will be announced and the price reaction to the announcement happens over a very short time, weekly…

Stock Option Investment Advice

The Best Covered Call Strike Price

Writing covered calls (CC) is a commonly used strategy for increasing income in a stock portfolio. Just to review, a covered call (CC) strategy consists of buying a stock and writing (selling) a call against the stock. Your stock, acts as collateral for the obligation to deliver the stock if the stock price is above the option strike price at expiration. You receive option premium income because you give the right to an option buyer to buy your stock at the strike price. A basic rule of thumb in writing covered calls (CC) is to choose underlying stocks that you wouldn’t mind holding in case the stock declines. This basic rule would also apply if you were buying a stock for its’ dividend income. In both cases, the highest risk in the position is the decline of the stock, which could create a loss many times larger than the income…

Stock Option Investment Advice

Locking In Gains on a Long Call Option Position

You have probably heard about using put options to lock in a gain on a stock that has moved up in price. This is also one of the ways investors can lock in gains on a long call position. We received an email from a PowerOptions customer with the following details: “Bought AUY Jan 20 2017, $1.50 CALL @ $1.19 a long time ago.  Current price of the CALL is $2.85. I don’t own the stock itself. How do I lock in the profit but stay with the position, as I think that gold has a bright future? The only idea that crossed my mind is very simplistic: buy a protective PUT.  For example, pay $1.41 for AUY Oct 21 2016 $5.50 PUT.” Let’s break down this position: Yamana Gold Inc. (AUY) currently at $4.21 [ cialis professional 20 mg | viagra soft 100mg pills 360 pills $471.00 | plendil…

Stock Option Investment Advice

Long Straddle/Strangle Example for Earnings Season in this Market Environment

Straddle/Strangle Example Many of you know, I’ve been trading for over 50 years. Over that time, I’ve come to recognize market conditions that coincide with trading opportunities. Here are some of the conditions that led me to one of my latest trades… and an example trade you might love! The last two weeks of October is when most companies announce third quarter earnings. This particular October, following several years of bullish market conditions, stocks appear to be topping and consolidating. This topping process seems to be accompanied with increased volatility. In this mix of market environments, stocks with earnings disappointments are getting hit particularly hard while other stocks having positive surprises and large upward moves. This seemed to be an opportunity to speculate with an option strategy that might take advantage of these wide swings in stock price due to surprise earnings announcements. The long strangle is an option strategy…

Stock Option Investment Advice

A Balanced Approach for Portfolio Success

The Conservative Barbell Strategy We recently reviewed a book written by Nassim Taleb called “The Black Swan”. In it, the author suggests an approach for investing called the Barbell Strategy. The approach is based on the concern that unexpected market events can happen with devastating impact to our portfolios. The Black Swan is about such events that are generally unknown, unpredictable, and cannot be planned against to mitigate losses. Because they are unpredictable they cannot be avoided, we need a way to protect assets as best we can against these unforeseen events. The Barbell strategy uses the two extremes: Ultra conservative positions at one end and highly leveraged, speculative positions at the other end of the risk range. The strategy advocates having most assets in very safe securities like treasury bills and a small portion in high risk – high reward securities like options. The Barbell image is used to…

Stock Option Investment Advice

Effectively Track and Manage your Options Investments

As we approach options expiration you need tools to properly track, evaluate and manage your options positions.  All of this can be done using the Portfolio tools on PowerOptions. You can quickly create and enter new or existing positions into the Portfolio tools. Once a position is entered you can set Alerts to be notified when profit targets are hit or when losses may need to be managed. As you track your positions you can link to the Position Analysis tool to see your current liquidation and future expiration values as well as view various roll out opportunities for your positions. As you are viewing potential Roll Out Opportunities you can link to the Trade Simulator tool to see the before and after profit and loss graph of your current position compared to the potential adjustment. This video shows just how easy it is to enter positions into the Portfolio…