Nov 10, 2012 | Option Trading Basics, Stock Option Strategies
An integral part of understanding option trading basics, is mastering the components that influence option value. Many option traders will look to make money as a result of a discrepancy between an option’s current market value and its theoretical value. In other...
Nov 3, 2012 | Option Trading Basics, Stock Option Strategies
JUST BECAUSE YOU BUY ITS PRODUCTS DOESN’T MEAN YOU SHOULD BUY ITS STOCK The KORS initial public offering was the topic du jour among my girlfriends at a holiday party last December. The ladies I know who invest in stocks were trying to figure out how to get in on the...
Oct 27, 2012 | Option Trading Basics, Stock Option Strategies
As safe a strategy as covered call writing is there is some risk; the risk is in purchasing the stock, not in selling the option. For this reason, some investors who sell covered calls also buy protective puts to alleviate some of the risk especially in volatile...
Oct 6, 2012 | Option Trading Basics, Stock Option Strategies
Sophia Loren once said, “It’s better to explore life and make mistakes than to play it safe. Mistakes are part of the dues one pays for a full life.” I presume she was speaking about love and romance rather than options trading, but her advice is sage in both...
Jul 21, 2012 | Covered Call Exit Strategies, Option Trading Basics, Stock Option Strategies
Exit strategy execution is critical to maximizing our covered call writing success. But what approach should we use if the underlying equity declines in value? Many investors use a stop loss order when a stock they own declines in value. The question then becomes is...
Jun 18, 2012 | Option Trading Basics, Options Calculations, Stock Option Strategies
Whenever a study is performed on covered call writing a stock is selected and the nearest out-of-the-money (O-T-M) strike price is sold. This is repeated over and over and then the results are compared to the overall market performance. The usual conclusion is that...
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