A Little Less Bullishness For Google

Posted by on June 14, 2012 1 comment

In a couple of previous articles related to Internet search company Google (GOOG) posted on April 15, 2012 and May 25, 2012, bull-put credit spreads were considered for the company. A bull-put credit spread may be entered for a credit by selling one put option and purchasing a second put option further out-of-the-money with the goal of the options expiring worthless and retaining the initial credit as a profit. The first bull-put credit spread was successful and provided a return of 7% (70.5% annualized).

The second bull-put credit spread considered consisted of a short 2012 Jun 540 put option and a long 2012 Jun 515 put option. The position was entered for a net credit of $1.77, which represented a potential return of 7.6% (126.4% annualized). A management point of $565 was set for the position, which has been breached (shown below), so consideration for an exit or a roll is given. Additionally, since there’s only 4 days until June option expiration, consideration is given for modifying the management point and maintaining the position as is.

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Netflix: Highest Return Protected Covered Call

Posted by on June 8, 2012 No comments

A protected covered call or collar search performed using PowerOptions tools, seeking to find the highest returning position for companies with a maximum potential loss of 8% and a stock price in an uptrend, produced digital video content provider Netflix (NFLX) as shown below:

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Memorial Day and Remembering

Posted by on May 23, 2012 No comments

It’s good to take time to remember those who were in the military and have performed the ultimate sacrifice. I was never in the military, and at my age the military wouldn’t even take me, but I really respect those who serve, have served and those who have sacrificed in the military.

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Memorial Day is a reminder every year of how bad my memory is. Outside of car keys, wallet and cell phone, I can scarcely remember where anything else is. For example, I have no idea where my staple gun and funnels are located.

When it comes to investing, my memory is just as bad as it is with my staple gun and funnels, can’t remember the trades I’ve made or the reason(s) for the trades, which is why I use PowerOptions tools to do my remembering for me.
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The Best Investment for Mom on Mother’s Day

Posted by on May 9, 2012 No comments

Stumped trying to decide what the perfect gift to get for Mom on Mother’s Day? How about an investment in on of her favorite companies? Better yet, how about the “best” protected covered call or collar investment in one of her favorite companies? A protected covered call can be entered by selling a call option against the stock and using some of the proceeds from selling the call option to purchase a protective put option.

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Those Who Do Not Learn From History are Doomed to Repeat It

Posted by on April 2, 2012 1 comment

Historical search capability is an important companion to selecting your own search criteria for investments. Many investors use paper trading (simulated trading without money) as a means to test their investment rules or screening criteria. But paper trading is very time consuming. And it is difficult to test over a variety of market swings. It may take months for a set of criteria to be tested. Many Brokers encourage paper trading, but few of them have the historical testing capability when options are used in the trade.

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Searching for Protected Covered Call with Dividends

Posted by on March 13, 2012 No comments

Before getting to the meat of this tutorial, if you are a subscriber to PowerOptions you should consider recommending PowerOptions to your friends and acquaintances, as you can receive a subscription for a free month to PowerOptions for every friend that you recommend and that becomes a subscriber. You can send your friends and acquaintances a link which they can click on which will automatically give you a free month once someone you recommend PowerOptions to subscribes. You can find out more about the Refer-A-Friend program after logging into PowerOptions by selecting the “Home” tab and then selecting the “My Account” sub tab, followed by selecting “Tell a Friend”. Once you select “Tell a Friend”, you will be presented with your personal link which you can email to your friends or post on Facebook, Twitter, etc.

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How to Trade Index Spreads with Tax Advantage

Posted by on January 4, 2012 1 comment

Preparations for paying income related taxes come with the start of a New Year. In this article, we’ll show how investors can potentially reduce their income taxes for broad based index spread trades and introduce methodologies and tools for trading broad based index spreads.

Section 1256 Contracts Marked to Market

Trading broad-based index options for taxable accounts can have some favorable consequences when paying federal income taxes. The IRS has a provision known as a Section 1256 Contracts Marked to Market. A section 1256 contract is any:

  1. Regulated futures contract,
  2. Foreign currency contract,
  3. Non-equity option,
  4. Dealer equity option,
  5. Dealer securities futures contract.

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4 Ways to Insure Your Investment Portfolios

Posted by on September 9, 2011 1 comment

Conventional Approach

The conventional approach for protecting a portfolio against a large loss, research, buy-and-hold and diversification works well for singular events like an Enron or a Worldcom. However, for systematic market problems this approach can be very painful, as the stock market can drop significantly with very few stocks maintaining their value.

The stock market can behave crazily at times as in the case of Technology Bubble, Lehman Brothers, Housing Bubble, Credit Crisis, Debt Ceiling, etc. Investors can be taken for very painful rides during market events such as these.

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(to view archived version of this presentation click the video below)

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Stock Option Spreads — Two Things to Consider Before the Greeks

Posted by on August 1, 2011 No comments

We get a lot phone calls related to option spread trading, many of which start of with something like “what do you think about the Delta for this option?”, or something similar related to one of the other Greeks: Gamma, Theta, Vega or Rho.

But before considering the Greeks, it’s a good idea to consider the support and resistance for a stock, index or ETF.

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Beating the Market with Blue Chips on the Dips and Stock Options

Posted by on May 4, 2011 No comments

By blue chips and dips, we’re not talking about those fancy blue corn tortilla chips with salsa, no we’re talking about Covered Call positions for stocks of blue chip companies or very large companies.

Most Well Known Stock Option Strategy

The Covered Call strategy is the most well known stock option investing strategy. The Covered Call strategy is easy to implement and is less risky than many other stock option strategies. Entering a Covered Call position entails purchasing a stock and selling a call option against the purchased stock. The Covered Call position can return a higher return than experienced by the plain-old long stock position, and the converse is also true, the long stock position can return a higher return than the Covered Call position. A typical potential return for a Covered Call position is around 2-3% over a timeframe of one month.
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