Recent Articles and Videos

The “up” scenario

Saturday, October 6, 2007
Filed Under Intermediate Options Trading 

In the “up” scenario, the maximum gain that can be attained is the stock finishing at $10.00 or higher. At $10.00, you would profit from the full value of the extrinsic value of the option which is $.50 and you would also have $.50 of capital appreciation from the stock for a total of $1.00.…click to read more.

Time Decay

Friday, October 5, 2007
Filed Under Option Trading Articles 

Time decay, also known as theta, is defined as the rate by which an option’s value erodes into expiration. The value of the option over parity to the stock is called extrinsic value. Since an option is a depreciating asset, meaning it has a limited life, the extrinsic value in the option will wither away…click to read more.

For better or worse, most investors purchase stocks with the intent of holding their shares for an extended period of time. We do this mainly because the media and industry professionals have drilled into our heads, year after year, time after time, that it’s best to buy and hold. The recent bull market phenomenon also…click to read more.

An at-the-money option has both advantages and disadvantages over stock and in-the-money options. First, the at-the-money option will be cheaper then both the stock and the in-the-money option. So there is less capital requirement and less total risk. Remember, when buying an option, you can only lose what you spend. The problem is the amount…click to read more.

Sallie Mae gets an intriguing proposal…

Tuesday, October 2, 2007
Filed Under Market Snapshots 

Today’s tickers: SLM, WAG, GRMN, RIO, FCX, NEM, AA, MFE, PDLI, CREE & CBH SLM – News today that an investment consortium led by J.C. Flowers and including Bank of America and JP Morgan Chase would offer $50 per share for Sallie Mae (SLM) in combination with warrants for outstanding shares, sent the company’s fortunes…click to read more.

A Put Option

Tuesday, October 2, 2007
Filed Under Intermediate Options Trading 

A put option is a contract between two parties (a buyer and a seller) whereby the buyer acquires the right but not the obligation to sell a specified stock or other underlying instrument at a specified price by a specified date. The seller of a put option assumes the obligation of taking delivery of the…click to read more.

Trading Naked Calls & Puts

Tuesday, October 2, 2007
Filed Under Intermediate Options Trading 

An option is a derivative trading product that is best used by investors as a hedging tool providing profit protection and profit enhancement. Although it is a powerful risk management tool, it can also be used effectively as a stand-alone trading vehicle. Under the proper conditions, options do not have to be paired with stock…click to read more.

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