Options Investing: Choosing Your Options
January 1, 2001
When investing in options, one of the key factors is choosing which options to invest in. The articles below should help you understand all of the intricate nuances of choosing the right options.
Wondering what the difference between the bid price and the ask price is? Check out Smart Options #279, The Options Bid: “The Bid, the Bid, Always the Bid.” Picking your options out of the money or in the money? You’ll want to know how to choose the right strike price, find out more in Smart Profits #276, Strike Prices: Increase Your Odds by 99%
More Smart Profits Articles About Choosing Options:
Get The Entry Price You Want: The 3-Step System To Magnify Your Profits
Implied Volatility: The Impact of Beta on Your Option Positions
Hedging & Speculating: How to Enjoy Guaranteed Monthly Income With Options
The Options Bid: “The Bid, the Bid, Always the Bid”
Options Trading Online: Power Up Your Options Trading With A Trio Of Top Options Web Resources
Hedging Your Long Positions: “Putting” More Money Into Your Portfolio
Margin: How to Turn a 10% Bump into a 50% Jump
Strike Prices: Increase Your Odds by 99%
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Options Investing Part 2
January 1, 2001
Finding Your Options Value
Investors often have questions about how the Smart Profits analysts approach the markets… as in, where do you start?
There are more than 9,000 publicly traded companies in the U.S., and a good number of them have options. Plus, the broad market isn’t exactly on fire right now; nor is it tanking.
So, how do you find a good trade with so many companies out there…and what type of options trading strategy do you employ…especially when your overall view of the market is neutral? You have to find a way to narrow your focus.
That’s what we’re going to show you: how to hone in and isolate options trading opportunities in a sensible way… so that you know why you’re trading (long or short) and how to give yourself the best chance at success.
Investing In Options Articles on Smart Profits Report:
The Market Volatility Index: Using The VIX To Straddle And Strangle Stock Options
Fair Value Sheets: Quote, Trade and Hedge… In Less Than 30 Seconds
Using a Probability Calculator: Know Your Trade’s Exact Chance of Success Up Front
Black-Scholes Model: Finding Fair Value And 30% Returns in Two Days
Looking for Sector and Company Trends: Profiting From the "Templeton Tactic"
Trade Small… Save Big: The Single Best Piece of Trading Advice Ever
Reading Option Chains: The "Fail Safe" Trading Signals Revealed
Smart Trades For the Computer Age: Maintaining Profit Targets
Option Chains: How To Pick Your Ideal Option if You’re Bullish on a Stock
The VIX Index: Instant Access to the World's 'Best Contrarian Indicator'
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Investment Brokers
January 1, 2001
Getting The Best Deal
There’s one aspect of trading that continually seems to frustrate and irritate beginners, mid-level investors and pros alike. Saving on online broker commissions is a great way to protect your bottom line and maximize your gains.
But it’s crucial that you get a handle on it, because no matter how many expert tips you incorporate into your strategy, if you struggle here, you’re always going to play catch-up and any gains you make will always be offset.
The beauty of the the Internet is that it’s revolutionized the way business is done and leveled the playing field for investors. Being online is more cost-effective and the flurry of competition has driven broker commissions costs lower. In fact, I’ve personally gone from paying $19.95 per stock option contract just a few years ago to paying only $1 today per stock option contract. That’s a sweet deal!
Investment Broker Articles on Smart Profits Report::
Online Broker Commissions: How to Get the Best Deal on Your Options Commissions
The Search For A Good Broker: Five Tip-Offs Your Broker’s A Fraud
How To Effectively Handle Any Broker: Secrets To Getting Started In Options
How to Open an Options Account: Not Always a Simple Task
Why Your Broker Drives a Porsche and You Drive a Chevy
Why Choose A Full-Service Broker: Get Your Option Prices Filled Everytime
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Option Trading Books
January 1, 2001
Longtime Smart Options Report readers may know that Investment Director Karim Rahemtulla generally loathes to recommend any options books because, frankly, they tend to be boring. But since options are getting more popular, there are more books written in an exciting and engaging fashion making their way to the market.
The selection that Karim purchases runs the gamut from elementary to advanced. Below are the best ideas from the best options books that our analysts have read lately… and that you might want to make part of your trading library…
Smart Profits Report Recommended Reading List:
Get Rich with Options: Four Winning Strategies Straight From The Exchange Floor
Trade Your Way To Financial Freedom: Reviewing The Holy Grail Of Investing
"The Only Realistic Options Book at Barnes & Noble"
How to Get the World’s Best Options Book - Free
Fun Options Books for Serious Traders
Smart Profits Report Recommended Option Books
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Options Exchange Information
January 1, 2001
There’s a lot of information out there. One of the things that we, at Smart Options, pride ourselves on is education (that’s a boring term for what we’re really doing: preparing you to do battle in the options arena).
We want you to learn more about options, more about strategies, and more about using options as part of your overall portfolio. There are few websites out there that deliver the goods when it comes to learning about options. One of our favorites is the Chicago Board Options Exchange’s site - www.cboe.com.
The CBOE (Chicago Board Options Exchange) is one of the highest, if not THE highest, authority on options trading. And the website reflects that. It is an SEC-regulated options exchange that provides investors with very important tools and education about options, ranging from complex strategies to calculating returns.
And remember: The best options traders take advantage of every good resource available - especially the free ones.
Option Exchange Articles on Smart Profits Report:
The Options Pit: Controlled Chaos In the Pits at the CBOE
Option Exchanges: The New ‘Boston Market’ - And How to Profit from It
The Chicago Board of Options Exchange: The Website Every Options Trader Should Know
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Stock Options 101
January 1, 2001
"Trading options is like buying a house, only better…" That’s what we often tell readers who are trying to grasp the concept of options trading for the first time. They’re often confused about whether they have to exercise the options, or how they make money. What happens, they ask, if no one buys their option from them?
Most people buy the number of stocks they want and pay for them up front, in full. Or, they trade on margin, and only put up 50% of the full amount. This could be the equivalent of paying all cash for a real estate investment, or making a 50% down payment.
How does this compare to buying a house? When you buy a house, you sign a mortgage contract, make a down payment, and make monthly payments to the bank for a fraction of the house’s value. Even though you don’t own the house outright, you still get all the same benefits - you get to live it in, use the water, electricity, cable, phone, yard and anything else that comes with the house. Yet, you only have to pay a small amount each month to stay there.
With options, you get that and more. You only have to pay the up-front cost, just like a down payment when you buy the house. But with options, you can control 100 shares of stock for every option contract you buy, but you never have to pay for the stock in full. You’re leveraging yourself by putting in a little to control a lot…
Getting Started In Options Articles on Smart Profits Report:
Opening An Options Account: Smart Profits Basics
Basic Trading Rules: The Four Rules of All "Smart Money"
Make Your First Option Trade: In Three Easy Steps
Buying Options: Like Owning a House Without Monthly Payments
Secrets to Getting Started In Options
Trading Options 101: An Options Secret From a 20-Year Trading Veteran
Trading Lessons: Catching The Market Waves for Stress-Free Trades
Smart Profits Quiz: Test Your Options Knowledge
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Stock Option Basics
January 1, 2001
Investors are riveted by the ins and outs of option investing. The options market may sound like arcane stuff, but many investors have become much more savvy about options and other so-called derivatives.
Learning about how to put options to use - not merely as a speculative tool - is becoming more common. Options are far more accessible today than they were even 10 years ago. There are more exchanges and more choices for companies that have options traded on their shares. In addition, investors are seeking ways to boost their returns without undue risk. And with the cost of trading options declining dramatically, many people who were on the fence have climbed into the arena.
So, if you are pondering whether you should "try" options, our advice is to take it seriously and spend a little bit of money for a lot of education. Win or lose, it will be the best money you will ever spend in the market. And, who knows, it could be the beginning of a great new relationship between you and your money!
Smart Profits Articles About The Fundamentals of Stock Options:
Call Options: Why Would Anyone Buy A Call?
Put Options: Why Short a Stock When You Can Buy a Put?
Investing In Options: 3 Powerful Option Strategies That Make More Sense Than Stocks
The Breakdown Of A Covered Call Trade: How You Can Get Paid For Holding Shares
Buying Put Options & Covered Calls: Two Ways To Play A Downside Trend
Option Prices: How to Get the Best Price on Your Options
Put/Call Ratio: When this Number Jumps, It’s Time to Trade
American Options, European Options & Synthetic Options: Threefold Profit Potential
Option Contracts: An Options Myth Unraveled - 90% Of Contracts Don’t Expire
Married Put Strategy: Your Go-To Options Insurance When Times Are Good
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Trading Options Tips
January 1, 2001
We often run into investors who don’t participate in options because of fear. The fear is not so much about the options strategies themselves, but the actual physical trading of options. After all, there is a whole new set of terminology - contracts, expiration, Black-Scholes, premiums, puts, calls, bull spreads, collars, straddles, etc. - and it can be overwhelming.
Our analysts first delved into the options markets head first, decades ago. They had the same apprehensions about learning something new and different - Your dealing with hard-earned REAL money. No paper-trading going on, just real trading.
You can paper trade all you want, but until you get your feet wet - even with the smallest trade - you will never get the feel for what options really are and how they work.
Trading Options Tips & Tricks Articles on Smart Profits Report:
Stock Market Trading: Two Ways To Eliminate Ill-Advised Stock Investments
Smart Profits Trading: Four Critical Truths
Investor Sentiment & Market Behavior: Seven Tips For A Profitable Downside Bias
Double Your Money: The Truth About Making 300% Overnight in Options
Option Losses: How to Grow Rich From Your Options Losses
The Smart Profits Report: Become Smarter than 98% of Investors…
Options Trading Tools: The Six Key Tools for Trading Options
Common Options Mistakes: Four Options Resolutions to Make Today
Sell to Close Options: How "Patient" Trading Turned $8,000 into $192,000
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Covered Calls Articles
January 1, 2001
If you own at least 100 shares of stock in your account, you have the opportunity to sell a covered call option against those shares.
So, what does that mean?
Basically, you can sell one call option (one option contract equals 100 shares) against the shares of the company you own to an option buyer.
In doing so, you’re giving up the right to own the shares to the person who buys the option from you. And when he buys, he now has the right to buy the shares from you at a pre-determined price (the strike price). For that right, he must pay you money - yours to keep, free and clear, no matter what happens in the future. That’s your return.
If the stock moves up past the strike price of the option you sold, you will then be obligated to sell your shares of stock to the option buyer at the stated strike price. Is that a bad thing? Not if you do the trade correctly, and have a price in mind that you would be willing to sell the shares anyway.
Covered Calls Articles on Smart Profits Report:
Covered Call Options: Turning A Stagnant Stock Into An ATM
Buying Covered Calls & Put Options: Two Ways To Play A Downside Trend
Selling Covered Calls: Getting Cash for Stocks You Already Own
The Breakdown Of A Covered Call Trade: How You Can Get Paid For Holding Shares
Long-Term Covered Calls: The Best Way to Play Satellite Radio
Covered Calls Strategy: The "Big Daddy" of Options
Defensive Covered Call Strategy: What’s Better Than Making Money? Keeping It
Trading Deep-In-The-Money Covered Calls: Dividend Paying Stocks That Can Boost Income
Covered Calls and Put Options: How to Grow Your Equity By Going Naked
IBM and Google Covered Calls: Tracking These 2 Giants For An Income Jolt
Writing Covered Calls: How to Double Your Stock Profits with Options
Deep-In-The-Money Covered Calls: How to Beat Stocks with Less Risk
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