Short of having a crystal ball, picking winners when stock option trading is not as hard as many people would have you believe. In the first place, when considering purchasing or selling stock options, you need to conduct extensive research on the underlying stock yourself, or rely on someone else to do it for you [...]
Expiration dates for options of a single underlying stock are offered on a predictable cycle. Every stock with listed options can be identified by the cycle to which it belongs, and these remain unchanged. There are three annual cycles:
1. January, April, July, and October (JAJO).
2. February, May, August, and November (FMAN).
3. March, June, September, and December (MJSD).
In addition [...]
When you buy a call, you are not required to buy the 100 shares of stock. You have the right, but not the obligation. In fact, the vast majority of call buyers do not actually buy 100 shares of stock. Most buyers are speculating on the price movement of the stock, hoping to sell their [...]
If stocks can be compared to five-speed automobiles, stock options are F-16 fighter jets. In order to qualify for an options account, you have to state your level of experience, candidly reveal your level of liquidity, and pretty much accept that it’s your fault if you go bankrupt.
There is a reason for this. You [...]
In the stock market industry, the trade for stocks and stock options are often interchanged and some investors may be confused between the concepts behind these types of trades. First off, you should know is that these two animals have very different characteristics from each other, and using them interchangeably can be lethal if you [...]
Beginning options traders often make costly mistakes due to either a lack of knowledge or misinformation about the basic parameters of options and their exercise. Examples of common errors include being surprised that one is unable to close an index option position on the Friday before expiration, or being surprised by an unhedged option exercise [...]
You have probably heard people refer to options as a risky enterprise, akin to gambling. And it is true that options trading can be very risky, especially when engaged in with minimal knowledge and preparation. The average stockbroker or financial planner does not have sufficient options knowledge to guide you in the use of options [...]
Important insights into effective option strategies In The Complete Guide to Option Strategies, top-performing commodity trading advisor Michael Mullaney explains how to successfully employ a variety of option strategies, from the most risky–selling naked puts and calls–to more conservative strategies using covered positions. The author covers everything from options on [...]
Options trading involves trading the option to buy or sell a stock, at a set price (strike price), until the option expires. With commodities, this is also known as futures trading. Options expire on the third Friday of each month. Options with expirations of over a year are called LEAPS, which stands for Long Term [...]
This week is week number seven in this ten week series on stock options trading. Key number seven is to always trade with the trend. Let’s discuss that.
As my first mentor, Dr. Stephen Cooper, says ?The trend is your friend?. Generally, when the overall market trend is upwards then trade calls, when the overall market [...]