In the present article, I am going to explain how you can make money if you own shares and the market moves sideways. You know my attitude towards simple share buying, so I won’t go into details at this time. The starting point is that you own 100 AAPL shares. For some reason, you bought it and hold it, that’s your business. Meanwhile, you use the well-established, but mostly pretty weak, stock market risk management method: the stop loss.
It is a well known fact that most retails traders/investors lose money in the stock market. The numbers vary from 80% to 95%, but the fact remains. There are many explanations for that phenomenon, such as: poor money management, bad timing, bad government policy, poor regulation or a poor strategy. Personally, I'm not surprised. As an options newsletter editor, I see exactly why vast majority cannot make money consistently. I was there. Experienced it first hand.
In one of my previous articles I described a study done by tastytrade, claiming that buying premium before earnings does not work. The title of the study was "We Put The Nail In The Coffin On "Buying Premium Prior To Earnings".
I demonstrated that their study was highly flawed, for several reasons (strikes selection, stocks selection, timing etc.)
It seems that they did now another study, claiming to get similar results.
An option provides the owner the right to buy or sell an asset at a pre-determined price before or on a certain date. Options are basically of two types - Calls and Puts. A call provides the right to the owner to buy an asset while a put provides the right to the owner to sell an asset. Trading options can be very profitable for the owners. However, it is important to gain a proper knowledge and an understanding of options trading terms.
How many times did you hear from traders "I make 50% on most trades, so I can live with few 100% losers"? I guess too many. What those traders don't tell you is what impact those 100% losers have on your overall portfolio. This article discusses why position sizing is key to good and sound risk management.
A while ago I got an email from one of my Seeking Alpha readers. He told me that he is a big fan of my articles and asked how he can learn more. He wanted to make it his new career. He asked me if I can recommend any books or internet sites to learn/practice the options strategies. Then he said that he is new to trading options, he set aside a small amount of money in hopes of doubling it at least yearly.
The newsletters industry is full of crooks. I see too many "gurus" promise to make you money with no effort, charging thousands of dollars in the process. They present some of the highest risk strategies (like trading weekly options) as "low or no risk". They make a bad name to the whole industry. The Kirk Report is one of the few exceptions.
Shares of SodaStream International rose by 25% in intraday trading yesterday on a Bloomberg News report that it is in talks with an investment firm to be taken private in a transaction that would value the Israeli home soda system manufacturer at $40 per share. What would you do if you knew the news are coming ahead of time?
I got the following email today from tastytrade: "We Put The Nail In The Coffin On "Buying Premium Prior To Earnings. We look at whether or not you could make money on the implied volatility expansion leading up to an earnings announcement." Since buying pre-earnings long straddles is one of our key strategies, I went to watch the segment.
Option trading is not something you want to do if you just fell off the turnip truck. But when used properly, options allow investors to gain better control over the risks and rewards depending on their forecast for the stock. No matter if your forecast is bullish, bearish or neutral there’s an option strategy that can be profitable if your outlook is correct.
Over the last few years, Tesla used to report earnings during the first week of the second month of the earnings cycle (February, May, August and November). This cycle was expected to be no different. However, yesterday Tesla surprised the trading community and announced that they will report earnings on Thursday, July 31. What does it mean for the options traders?
