beginners corner
Archive by Author

Dollar-Cost Averaging- An Investment Technique for You?

One of the most common questions asked of me is: “How do I get started if I don’t have a lot of money to invest?” Another is “What is the most conservative way to start selling covered calls?” These questions evoke the same sentiments I had when I first began educating myself in this strategy: […]

41 Comments Continue Reading →

Stock Splits and their Impact on our Option Contracts

Definition  A stock split is a change in the number of shares outstanding (in circulation). The number of shares is adjusted by the split ratio, e.g. 3 to 1. In this case, 100 shares splits to 300 shares, however the share price is cut in third. Thus, the cost and current value of the investment […]

30 Comments Continue Reading →

Penny Stocks: I’ll Have the Salad

You’re out for dinner in your favorite restaurant. The waiter hands you a menu and you immediately focus in on the salad column looking for a healthy meal. Hmmm….broiled salmon on the house salad….looks good. As you continue to study your choices you notice the young couple sitting at the table to your right. Piled […]

28 Comments Continue Reading →

How to Read an Option Chain

So how much cash can we generate selling options on the stocks that have passed our fundamental and technical screens? The answer lies in the option chain. This is a list that quotes option prices for a given security. For each underlying security, the option chain lists the various strike prices, option premiums, expiration dates […]

61 Comments Continue Reading →

Setting Up Your Portfolio Using the Ellman Calculator and the Premium Report

It’s been a while since we talked math. What’s with all the frowns? Mastering and understanding the calculations (my calculator will do all the work!) will enhance our bottom lines…more cash in our pockets. With that in mind, let’s set up a hypothetical portfolio of 5 securities with a cash available reserve of $50,000. Since our […]

33 Comments Continue Reading →

LEAPS and Covered Call Writing

Wait a minute! What if I buy a call option instead of the stock and then sell a call option on that option? I’ll be spending less money than outright purchase of the equity and still generate cash from the sale of the call option! This idea has come to many of you and as […]

43 Comments Continue Reading →

The Case for 1-Month Options

I sell predominantly 1-month options. This decision was NOT based on anything I read or was told, but rather on experience and common sense. Most stocks with options have at least four expiration cycles affiliated with them at any point in time…the current month, the next month and two more months further out based on […]

34 Comments Continue Reading →

Common Stock vs. Preferred Stock

We’ve all heard the terms common and preferred stock. Are the common shares for retail, Blue Collar Investors while the preferred shares for the Wall Street insiders? Not exactly. They are both types of stock that a corporation may issue. Let’s clarify the difference. Definitions: Common Stock– This is a security that represents ownership in […]

37 Comments Continue Reading →

Fundamental Ratios: P/E, PEG and PEGY

Years ago, investors, stock brokers and financial advisors wanted to know the “P/E” of the equity before making a buy-decision. A low P/E meant that the stock was cheap and market forces would lead to price appreciation. The opposite theory also was considered Wall Street Fact: A high P/E represents an over-valued stock and one […]

30 Comments Continue Reading →