PowerOptions WeBlog

As you may have heard, Weekly Options have been released for several common stocks as we have previously discussed. Some new stocks have been added, and some other changes have been made.

On June 25th, 2010, Weekly Options were made available for 4 common stocks: Apple (AAPL), Bank of America (BAC), British Petroleum (BP) and Citigroup (C). On July 16th, Weekly Options were made available on four more stocks: Amazon (AMZN), Ford Motor Co. (F), Google (GOOG) and Microsoft (MSFT). On July 23rd, Weekly Options were available on 5 new stocks: Barrick Gold (ABX), Baidu (BIDU), Goldman Sachs (GS), Potash Corp. of Saskatchewan (POT) and Exxon Mobil (XOM).
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About a month ago we posted a blog discussing the new Weekly options that were available on stocks for the first time. On June 25th, 2010, Weekly options were released on four common stocks:

AAPL – Apple Computer, Inc.

BAC – Bank of America Corp.

BP – British Petroleum Co.

C – Citigroup, Inc.

Late last week, on July 16th, Weekly options were made available on four more common stocks:

AMZN – Amazon.com Inc.

F – Ford Motor Co.

GOOG – Google Inc.

MSFT – Microsoft Corp.

Weekly options carry the same rights and obligations as standard calls and puts. The only difference is that the expiration time frame is shorter. Weekly options are typically released on Thursday or Friday and will expire the following Friday.

If you would like to know more about Weekly options, join PowerOptions’ Director of Options Education, Mike Chupka, for a free presentation on Monday, July 26th at 4:30 PM Eastern Time: https://www1.gotomeeting.com/register/738392785

Mike will discuss the specifics of Weekly expiration options, common strategies used by PowerOptions’ subscribers using the Weekly options and of course, how to use the patented PowerOptions’ tools to identify strategies utilizing the Weekly options.

Today, June 25th, 2010, marked another new stock options investing product for investors.

Weekly options, also called short-term options or short dated options, have been available for some time on broad based market indexes: S&P 500 ($SPX), Nasdaq 100 ($NDX) and Russell 2000 ($RUT) for example. Earlier this month weekly options were released for certain ETFs: SPY, QQQQ, DIA and IWM. Today weekly options were released on four popular stocks:
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Due to the oil spill in the Gulf of Mexico, British Petroleum (BP) announced it is going to create a $20 bill fund to compensate victims and also cancel shareholder dividends for three quarters.

British Petroleum’s current annual %dividend is in the neighborhood of 10%. For those investors invested in BP depending on the dividend, this could be traumatic, especially if they don’t want to sell their BP stock because of tax reasons.

What should an investor stuck in this situation do?
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Insuring Investments

Investors often have insurance for their house, car, life and business, but many don’t have insurance for their stock investments and that is a real shame. One way to insure stock investments is by purchasing put options. An investor can insure an individual stock or a portfolio of stocks using put options. In the blog article, “Individual Insurance or Group Insurance Better?”, we examined the relative costs and trade-offs for insuring each individual stock versus insuring a portfolio of stocks using index put options. The basic gist of the article is that it costs less to insure a diversified portfolio of stocks with index put options than it costs to insure each position individually.
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“Flash Crash” of May 6, 2010…

The market event that occurred on May 6, 2010 is now known as the “Flash Crash”. “Flash Crash” accurately describes the situation, as the market crashed for just a flash, as seen below:

Over before you know it…

For those not watching the market closely and not having stop orders, the “Flash Crash” happened and everything was pretty much just as before. But for investors watching the market tank and selling in a panic or for those investors with stop orders set, the “Flash Crash” was most likely a disaster.
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Fish or Cut Bait…

A key to successful investing is knowing when to get out of a position. For example, the PowerOptionsApplied Titanium TradeFolio(tm) was invested in a covered calls position for Transocean Offshore (RIG). On April 20, 2010 RIG’s Deepwater Horizon drilling rig caught fire and subsequently sank leaving in its wake a huge and growing oil slick in the waters of the Gulf of Mexico. The Deepwater Horizon was being operated by British Petroleum (BP).
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At PowerOptions, we receive a lot of really good stock options related questions from our customers. A question we recently received related to our PowerOptionsApplied newsletter service was “can I trade your Iron Condors for $OEX just the same as for $XEO?”
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On Friday, February 26, 2010 an article in the “Making Money - Investors Corner” section of Investor’s Business Daily (IBD) written by Paul Whitfield, caught my attention. The article was about breakaway gaps as a bullish form of action. Whitfield illustrated several examples where stocks with price surges of 10% in a day often had very nice price appreciation gains several months in the future. The concept used in this type of stock selection depends on the positive event having some lasting power and traction. It uses the concept of buying high on positive news and selling higher. Articles in IBD often advocate this technique. This is the opposite of the buy low / sell high approach so often talked about by swing traders and other technical analyst.
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Double Diagonal - Neutral Strategy

The Double Diagonal is a neutral stock options strategy. The Double Diagonal strategy is similar to an Iron Condor and can be considered a combination of a Calendar Call spread and a Calendar Put spread.

The Calendar Put spread portion of the Double Diagonal is entered by selling an out-of-the-money put option and purchasing a further out-of-the-money put option having an option expiration further out in time.
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