Timing your entry into a position using options is very important because time premium is continually eroding from the position. Ideally we want to enter a bullish position just as the stock is about to move up. It is not possible to know in advance when the move will occur, but we can get an early indicator once the move has started. There are several tools available to help the investor pick the best time to enter a position. One such tool, which has been recently added to the PowerOptions screener, is the crossing of a stock price above a moving average such as a 20 or 50 day moving average. Another form of this tool is to use the crossing of the 20 day moving average over the 50 day moving average as a bullish trigger. Investors will scan charts looking for this type of crossing to trigger a…
Have you been using the PowerOptions Portfolio tools to help track and manage your options positions? If not, now is a great time to start! PowerOptions free trial users and subscribers can enter new positions into the Portfolio directly from the patented Search tools or manually with just a few clicks. Some basic features of the Portfolio tools to help you better track and manage your positions are: Profit and Loss Portfolio tool tracks your current positions as linked trades – meaning your covered call position will have the stock and call option linked together rather than separately. View Original Expected Gain vs. Liquidation Value vs. Future Expiration Value for the entire position, not just the individual leg.
We all want to succeed by making money with our investments. PowerOptions was designed to provide a set of tools to help and enhance the probability of success. If used properly PowerOptions can help you make more money. Follow these three steps on your road to improved performance:
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…
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: Sign up now for PowerOptions 14-day free trial
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. Sign up now for PowerOptions 14-day free trial
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. Sign up now for PowerOptions 14-day free trial
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. Sign up now for PowerOptions 14-day free trial
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: Regulated futures contract, Foreign currency contract, Non-equity option, Dealer equity option, Dealer securities futures contract.
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.