Option Theory
January 1, 2001
They say politics makes strange bedfellows, but investing makes stranger ones. At one end, you have the dry-bones academics who objectively juggle information and compute theories. At the other, you have sweaty everyday people who invest knowing nothing of the theory and often don’t behave like they should.
Alongside them are the every-day-in-the-market sharks. The big-money guys, professional traders and other adepts. Theory, they say? It’s just a tool, and they make their money punching holes in it.
Consider the theory of risk. Understanding options risk is central to knowing how to make money trading them. Academics and market makers understand it alike, but each treats it differently. And, most amateurs look at it backward.
Option Theory Articles on Smart Profits Report:
The Dow Industrials: The "Sell In May" Theory And Where The Markets Could Head From Here
Dow Theory: The Most Important And Powerful Concept In Technical Analysis
Game Theory: Making Profits With Mathematical Precision
Quantitative Research: An Interview with Dean Albrecht
Option Trading Recommendations: What Investment "Gurus" Do When No One’s Looking
Options Trading Experts: A Meeting of the World’s Top Options Traders
Option Pitfalls: Avoid These Five Options "Red Flags"
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Trading Strategies
January 1, 2001
If you cast your mind back to 2000, you might remember hearing stuff about how we’re in a new investment paradigm - specifically, how the Internet spelled the end for anything made of bricks and mortar. This new paradigm suggested that it was the norm to pay $1,000 per share for any Internet-related company - even if it had no revenues or earnings! It was the time that the market value of Cisco topped out at $550 billion.
But there is a newer, more disturbing trend developing - talk of another paradigm shift that could pose a greater threat to your wealth. And it’s something you need to be very aware of, so let’s take a look at this new shift and how you can combat it with a few simple trading strategies…
In a similar way as the Internet boom did back at the turn of the century, the new paradigm today claims economics, volatility and plain-old sound thinking as its victims - basically, that logic and empirical evidence are passé and that the past has no bearing on the future.
Trading Strategies Articles on Smart Profits Report:
Smart Money: The Best Way To Blaze Your Own Money Trail
Bear Market Investing: Don’t Get Burned By Bears… Here’s Your Five-Point Plan
Investing Strategies: Enjoy The Pleasure Of Option Investing Without The Pain Of Speculating
Improve Your Investing Results: Your 8-Step Checklist To More Successful Investing
The Perfect Trading System: 3 Ways To Break The Perfectionism Trap And Find the Blue Rose of Investing
Investing In Options: 3 Powerful Option Strategies That Make More Sense Than Stocks
Option Strategies: The Solution To The Most Dangerous Investment Paradigm Today
Warren Buffett’s Investing Strategy: The Master of the "Buy and Hold"
The Backspread Options Strategy: A Trade With Unlimited Profit Potential
The Short Squeeze: Don’t Get Squeezed When Investors Rush to Sell!
Option Trading Strategies: Option Plays That "Earn" Their Keep
Maximum Fear: How to Turn "Maximum Fear" Into Maximum Profits
Correlation Strategy: Identify the Tide And Ride It To Profitability
Damage Control: The Perfect Option Play for Hurricane Season
Buy-Write: Predict Your Profits With 99.7% Accuracy
Options Flyer: Three Rules for Profiting from an Options "Flyer"
Investment Speculation: Six Secrets to Creating a ‘300%-Return System’
Back-Testing Strategy: 1.8 Billion Ways to Improve Your Trades
Options Trading Strategy: To Find the Perfect Option
Option Profit-Taking: Making It Easy To Take the Money and Run
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Stock Option Strategies
January 1, 2001
As a professional investor and someone who spent six years as a market maker on the floor of the New York Mercantile Exchange, there’s one question that Lee Lowell’s friends and associates seeking the ultimate investment ask him all the time:
"What’s the best strategy you recommend for investing in stock options?"
Alas, we wish there was an easy answer… but there isn’t. The truth is… no single options strategy can be perfect for every situation because each person’s outlook and financial situation is different.
But right off the bat, there are three great reasons why it makes sense to invest in options instead of stocks: lower upfront cost, less downside risk, greater leverage.
After all, why pay full price for a stock when you can spend half as much money and get all the same rewards? The question is… how do we do that?
Stock Option Strategies Articles on Smart Profits Report:
Penny Stock Options: The New Pricing System Push Towards Pennies Means The Odds Even Out… And Puts More Cash In Your Pocket
Option Investing: The Hottest Ticket On Wall Street
Apple Options: Selling Naked AAPL Put Options is the Way to Invest in Apple
Google Stock Options: On The Fast Track
Derivatives: Take the Big Guys’ Money With Their Own Weapons
Trading Index Options: Two Ways To Profit
Option Strategies: The Solution To The Most Dangerous Investment Paradigm Today
Derivatives Markets: "Textbook" Trades Don’t Always Win
Index Options: A Billionaire’s Trading Tool Anyone Can Use
Options Strategies: The Perfect Options Strategies For A Seesaw Market
Selling Stock Options: Know This Key Selling Method To Profit With Options
Stock Options: How to Buy $2,446 Worth of MSFT for $1,270
Stocks With No Options: A Cautionary Tale About TZOO
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Portfolio Management
January 1, 2001
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