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The Truth About Options: Buying Puts & Calls On Stocks
Readers often ask me the truth about options and the advisability of buying puts and calls on stocks.
Let me begin by saying that options are tools, nothing more. Tools can be used to build something. Or they can be used to tear something down.
The key is to understand and master your tools and, more importantly, not destroy wealth when your intention is to create it.
Let’s start by defining our terms…
The Difference Between Put & Call Options?
Here are the differences between put and call options:
- A put option gives the owner the option of selling a stock at a specific price,…
This Market is Not Risky Enough
By John K. Whitehall, Oxbury Research
That’s right.
I’m tired of all the stability, certainty, and guaranteed returns in the stock market lately.
Or so seems to be the thought process behind Direxion Funds’ introduction of a couple of brand-new ETFs into the market yesterday.
One fund is a bullish fund (BGU) and the other is bearish (BGZ), each looking to replicate the gains or losses of the Russell 1000 index… except at three times leverage. In other words, 300% of the gains or losses that the Russell 1000 enjoys or suffers can be yours for the price of three little…
7Nov2008 | Oxbury Research | Comments Off | ContinuedOptions expiration trading patterns prevail
Program-trading firms could influence stock market direction
As strange as it seems, in all this wild volatility the weekly patterns are still playing out normally. For instance, options expirations take place on the third Friday of each month. The week before the expirations week tends to be negative.
The week in which the expirations will expire on Friday tends to be positive. And the week after the expirations tends to be negative. October has been a wild month in which the market has closed up or down by triple-digits 26 of the last 29 days, the one-day moves for the Dow…
29Oct2008 | Street Smart Report | Comments Off | ContinuedInvesting in Options Speculation
Sensible Speculation and Super Leverage
I was very fortunate to join my dad, Steve Sarnoff, as co-editor of Options Hotline in 1995, and I worked closely with him for four years. If you aren’t familiar with my dad, he’s an author of more than 60 books, editor of several newsletters, and what the New York Times called the “Dean of Commodities Analysts.â€
I laugh when I think back about those times because my dad — he really loved Options Hotline, and he would say to me, “Sonny, they’re the only one’s that have super leverage and it’s the only sensible way to…
9Sep2008 | The Penny Sleuth | Comments Off | ContinuedThe Best Way to Pick Options
The Fundamentals of Options
What’s the best way to pick option plays?
While there are probably hundreds, if not thousands, of different answers to that question, now is not the time to get overly sophisticated. I like to keep it simple, and I think you will, too.
Longer-Term Option Plays Are Key
In my options service, Easy Money Options, we focus on longer-term option plays. That way, our positions have plenty of time to work out while allowing powerful, longer-term forces to come into play.
What forces am I talking about? That’s easy: fundamentals.
Fundamentals are the basic forces that drive companies, like product sales, position…
2Sep2008 | The Penny Sleuth | Comments Off | ContinuedOption Pitfalls
Five Pitfalls Stock Option Investors Make Over and Over Again
One of the best ways to make money in the stock market is to not buy stocks at all. But instead, buy a stock’s derivative — or option. This way, you can actually control more shares of stock than you would normally be able to afford with limited downside, and virtually unlimited upside.
Many savvy investors do this all the time, instead of wasting time on regular shares of companies that at best, will only produce a tenth of what the company’s options will potentially bring investors. We’re talking about upwards of…
17Jul2008 | The Penny Sleuth | Comments Off | ContinuedSix Useful Tips When Investing in Options
How to Profit as Stocks Seek a Bottom
Stocks ended the holiday-shortened trading week looking for a bottom. Will they find it this week and test sellers’ mettle by mounting a strong snapback rally or will buyers continue to spit for distance like watermelon seeds at your 4th of July picnic? Time will tell…
So in light of this uncertainty, I’ll share my father’s strategies for both profit and preservation of risk capital in the face of future wild stock-price swings.
Paul Sarnoff’s Option Trading Rules
1. Never go short any stock. If you think the stock will drop, buy puts. That way, you will…
9Jul2008 | The Penny Sleuth | Comments Off | Continued
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