108 Things Shop

Let’s put together what we’ve been talking about, develop an
imaginary spread scenario and set it in real life events.

In October, let’s say that you begin to hear about IJK stock. It
looks interesting, so you then use a variety of sources to learn
about IJK: news, charts, outside analysts, internet research
etc. From your investigations you decide that this stock is
poised for a strong upward move and you’d like to take advantage
of it.

However, each share is $50.00 and you question whether you want
to put out the capital for enough shares to make the trade
worthwhile.

Now is the time to investigate IJK spreads. Since you are
bullish on the stock, you investigate the bullish plays of the
call spreads and the put spreads. You check the pricing of both
since you are aware that implied volatility and time decay will
affect both your purchase price and your selling price if you
decide to sell out the spread before expiration.

Let’s say that you set the spread’s maximum potential gain at
$10.00 using our formula. Then you decide you want to buy a call
spread, so you buy 10 IJK Nov. 50 calls and sell 10 IJK Nov 60
calls. The spread is called Nov. 50-60. The spread’s cost is
$3.50, which means you pay $3500 for the trade, inexpensive when
you consider that to purchase 1000 shares of IJK stock would
have cost you $50,000!
Now, you wait and follow the stock price of IJK. If you hold the
position to expiration, you face the following losses or gains.

First, if the stock does not move up as you expected and stays
at $50 or decreases in value, your spread is worthless and you
lose the $3500 that you paid for the spread. Second, if the
stock begins to move up, you first recoup your investment and
then move into profits. After the stock has moved up $3.50 you
are at the breakeven point. Every money advance after that
represents profit.

The chart below represents the spread’s losses and gains and
your total profit

This chart is based on stock prices at expiration Friday in
November. Until then the spread’s value fluctuates between $0
and its maximum (the difference between strike prices) of $10.00

At any time until expiration, you can sell out of the spread but
what you receive for the price may be influenced by implied
volatility and time decay and that will change your profit or
loss. If you hold the spread until expiration and your bullish
lean proves true, your maximum profit on your $3500 investment
is $6500.

You paid $3500 for the spread and received $10,000 at expiration
with the stock at $60.00. That represents a $6500 profit which
is a 186% return.

If you had invested $50,000 for 1000 shares of IJK and at
expiration sold the stock for $60,000, your profit is $10,000
for a 20% return.

For many investors the reward/risk scenario of the spread is
attractive because investors can limit the capital at risk and
the time of risk/reward exposure. The spread also offers
protection if your lean is bullish or bearish. Finally, the
spread has the potential of a large percentage return on
investment.

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[tags]vertical spread,scenario,strategy,options education,options trading,spread[/tags]

Opportunity can be disguised in many ways, and the creative among us must continually be wary of the nuances that may eventually make a profit. Many traders will dutifully follow the standard buy on breakout, sell on breakdown pattern to get their profit. But what happens when the markets don’t go anywhere? Most will just wait it out, until some volatility returns.

But what if there’s profit to be made when the markets don’t move? Well, there is a way to make a profit when you’re relatively sure your market is range bound for the indefinite future. Here’s how.

If you know the upper and lower range of your market, the way to profit is to buy an option spread on the upper and lower range limits of your market. What is a spread?

It’s when you sell an option at a higher dollar amount (closer to the current price of the underlying commodity) and simultaneously buy an option at a strike further away (and thus cheaper) than the underlying commodity. The net difference is a profit that you can pocket. If the market doesn’t move, then you keep the profit when the options expire. If the market does turn on you, then you’re only at risk for the difference in the strike prices between the option you sold and the one you bought. If you buy a spread on each side of your range bound market, you can pocket healthy returns. Suppose it takes off to the high side and takes out your spread there, well you still have the profit from the spread on the low side to cushion your losses.

The best markets to do this in are the indexes (For example, an airline or transportation index). You can get a list of these from any decent online brokerage site. Why indexes?. Think about it. Indexes are a basket of stocks that are grouped together. They provide stability yet allow you to trade a sector when you have an idea where that particular sector will go (Or not go in this case). Most importantly, their options are very liquid, which allows you to trade them effectively (One of the biggest shortcomings of options are that if they are thinly traded, your profits go way down, both because you will have difficulty buying or selling them in that situation, and the spread will be too great. By nature, index markets are less likely to spike in either direction than a single stock or commodity, and thus make them an ideal prospect for this type of trade. Try it out the next time you see the markets in the doldrums.

Paul Nickel is an active trader and his financial writings can be viewed at http://www.lowrisktrading.info.

[tags]options,trading,index,call,put,investing,stocks,commodities,commodity[/tags]

You are the proud owner of a web site that is experiencing some success, yet you still haven’t achieved the golden chest of web site revenue. Consider increasing your revenue stream by trying a creative approach. With a modest investment this steam of revenue does not require the use of new software, website tools, or a blasting search engine service.

They fuel your future profits by being placed in your option trading account. Perhaps you think you know your stock trading activities from your options. Here we do not use the stock market for your options. We use the futures contracts of the vast commodities markets of this country instead of stock options.

You can best think of options trading as a side business working in conjunction with your online business. Using this options account enables you place trades with several markets such as corn, pork bellies, soybeans, gold or the S & P 500 index.

For your options trading account to be set up you will need an online trading broker who handles your trades and forwards them to the one who handles the commodities you trade. Don’t ask your broker for advice since the large majority don’t know any more than you which way the market is going today. It is best to work with a broker who allows you to do your trading online without assistance, and doesn’t charge unreasonable commissions on you trades.

Use wire transfers, a cashiers check, or as a last resort your personal check to fund your trading account. Once your account is open you may begin to use your online trading broker, but before you start trading do a little research. This is widely available and will serve you well.

Article space does not provide me the time to discuss this aspect of your new side line business. Don’t let this discourage you. Just go online where you will find many excellent sources of information on this topic.

Stock market trading, and futures market trading moves at a faster pace than the options trading. This slower pace has the advantage of being more manageable. This will prevent the knee jerk syndrome people have when a futures market moves against them too rapidly.

After your options business is up and running with some trades placed it almost works on its own. All this takes very little time, unless you peak an interest. Then time is all up to you in keeping up with your future markets.

Trade carefully and conservatively and you will benefit from your options trading.

Thanks for reading. If you found this article helpful you can get more options trading information, tips, and more articles on my website: http://www.learningoptionstrading.com

[tags]options,options contracts,futures trading[/tags]

There are two main types of vertical spreads. There is the
vertical call spread and the vertical put spread. Each spread
allows you to do two things. First, you can buy it, making you
long the vertical spread. Second, you can sell it making you
short the vertical spread. Both can be employed to take
advantage of directional stock plays. When we use the term
“directional stock play,” we refer to using vertical spreads to
capitalize on anticipated stock movements either up or down.

A bull spread is used when the investor feels that a stock is
most likely to go up. As we recall, “bullish” means to have a
positive outlook on a stock’s future movement. There are two
ways to set up a bull spread. The first is with the use of
calls. In this case, a bullish investor would buy a vertical
call spread (bull call spread). This is accomplished by buying a
call with a lower strike price and selling a call with a higher
strike price.

The second way to construct a bull spread is with the use of
puts. A bullish investor could sell a vertical put spread (bull
put spread) hoping to profit from an increase in the stock’s
value. The investor would sell a put with a higher strike price
and buy a put with a lower strike price. Let’s take a look at
how the P&L chart of a Bull Spread looks below.

To recap, if you feel a stock will be increasing in value, you
may put on a bull spread by either buying a vertical call spread
(bull call spread) or selling a vertical put spread (bull put
spread)

A bear spread, however, is used when, you the investor, feels a
stock is likely to trade down. Remember, “bearish” means that
one’s outlook on the future movement of the stock is negative.
To take advantage of this expected downward movement, the
investor would put on a bear spread. This can be done in either
of two ways.

First, the investor can do it using puts. The purchase of a
vertical put spread (bear put spread) can be accomplished by
purchasing a put with a higher priced strike and selling a put
with a lower priced strike.

The second way an investor can construct a bear spread is by
using calls, specifically, by selling a vertical call spread
(bear call spread). You do this by selling a call with a lower
strike price and purchasing a call with a higher strike price.

So if you think that a stock is likely to decrease in value, you
sell a vertical call spread (bear call spread) or purchase a
vertical put spread (bear put spread). Let’s take a look at the
P&L diagram for a Bear Spread below.

Finally, there are two fundamentals that are universal to all
vertical spreads. These fundamentals are critical to
understanding the foundation of the vertical spread strategy:
(1) you can determine a vertical spread’s maximum value by
taking note of the difference between the two strikes and (2)
vertical spreads have intrinsic value.

_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/
Amazing Options Trading Strategies For Safer Investing
and Explosive Profits. Discover how to protect your
investments with the leveraged power of options. Step
by step video tutorials show you how. Click here now:
http://www.options-university.com
_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/

[tags]vertical spread,options,strategy,options education,options trading[/tags]

If you are an online article writer perhaps you have considered trading article writing for tangibles. Like what you ask? Well, recently I traded some articles for a bicycle, then I changed my order from a Mountain Bike to a Ten Speed simply by stating; Do you mind if I change my order to a Ten Speed bike instead of a Mountain Bike? Hopefully you will not mind and it might save you some money actually?

Ten speeds tend to go for less on the Internet Auctions anyway? You see if there is something you want and something someone else needs like articles, then you can choose an exchange tender and it can be anything you want.

Why you ask? Well they can simply set up a bid at eBay and find someone willing to give them the best deal and buy it online and have it shipped to you. Everyone wins and they can buy it for much less than retail. You get more bang for your buck (articles this way!). Of course you will need to set your parameters for instance;

Something decent, other than a department store bike? My parameters are simple;

• Good seat,
• Shimano shifting
• Trek low-end or comparable type bike.
• Light weight,
• Not stolen.
• Yellow or Blue in color (preference only).

Basic stuff, I am not so picky, but I know I need something that will make it the whole way you know? If you will consider writing articles and trading for what you want you will have most of those things soon. So, consider all this in 2006.

“Lance Winslow” – Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; http://www.WorldThinkTank.net/wttbbs/

[tags]Trading Article Writing for Tangibles[/tags]

There are many free link exchange sites on the internet. Link exchange is beneficial. However, competition online is increasing. In any given industry, most of the time, the sites competing for top positions in the search engines have over 1000 links to their website. To use a free link exchange program can be very time consuming, slow and discouraging. Especially when trying to reach that 1000 mark one link at a time.

There are programs online that will provide you with hundreds or thousands of backlinks in a short period of time.

There are some things you should make note of before starting a link exchange program:

Make sure you use keywords in and around your link – You may think that your link, buried in a sea of 25 other links will never be seen by an actual visitor. But, while no one usually goes to someones link page looking for a site to visit, search engines will pick up on your keywords and sometimes rank that page with your link on it high in the search engines. This can result in direct traffic for your targeted keywords.

Site wide links do almost no good – A few years ago, having a link on every page of another website would increase your search engine rankings considerably. However, nowadays a site wide link on another website will not help you at all.

Links exchanged with relevant sites increase your ranking – Figure that the search engines are trying to determine what industry and topics your pages are related to by who is linking to you. The closer in relevance your link is, the more it helps you rank higher for those pages.

Try more than one option. Spend your time wisely by spreading out your efforts. Do a little manual link exchanging. Try a couple of automatic link exchange programs. Write good content for your website to increase natural linking.

View our recommended source for automatic link exchange
with thousands of sites, for dirt cheap.

[tags]link exchange, free, link trading[/tags]