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As previously stated, when we buy a stock, three potential outcomes exist. The stock can go up, go down, or remain stagnant. Let’s hypothesize results across these three scenarios. Say you buy the stock for $31.00 and buy the front month 30 put for $1.00. In the “up” scenario, let’s assume the stock price is…click to read more.

October 14, 2007 Market Report

Sunday, October 14, 2007
Filed Under Market Snapshots 

Well I think that the one word that could best describe the activity of the US equities markets last week would be indecision.  We appear to have landed in a sideways market, subsequent to the major indices reaching new highs and now consolidating, albeit in quite violent intraday fashion.  The bulls and bears are locked…click to read more.

The Protective Put Strategy

Sunday, October 14, 2007
Filed Under Intermediate Options Trading 

The Protective Put Strategy As a reminder, a put gives an owner the right but not the obligation to sell a certain stock, at a specific price, by a specified date. For this opportunity, the buyer pays a premium. The seller, who receives the premium, is obligated to take delivery of the stock should the…click to read more.

NOTES ON SPRINT (FON) Covered Call 1. After a large drop at the end of Jan 2003, Sprint consolidates around $12.00 and trades in a relatively tight range, around $12.00, for approximately 5 months or until mid-May 2003. This period is the first opportunity for premium collection. 2. At the end of May 2003, Sprint…click to read more.

NOTES ON DELL COMPUTER (DELL) Covered Call 1. After dropping out of a higher trading range, Dell trades down throughout the months of December 2002, January 2003 and into mid-February 2003 before bottoming out. During this period of time, the drop was a low volatility, gradual one in which the stock loss could have been…click to read more.

Today’stickers: BIDU, VIX, JWN, SII, F, GM, WMT, NRG, GSF, GOOG BIDU – When Confucius said that a journey of a thousand miles starts with a single step, he didn’t know he was likely referring to the share price performance of Chinese Internet search-engine Baidu.com. Just one year ago the shares could be bought for…click to read more.

NOTES OF J.P.MORGAN (JPM) Covered Call 1. By June of 2003, JPM had traded up from a lower trading range in the $25.00 area to a new range around $35.00. 2. Since entering the new trading range in June, the stock has consolidated into a relatively flat, horizontal trading channel. For the most part, this…click to read more.

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