Listen to those forgotten tunes like Fever Tree's "99 and 1/2"
and Rare Earth's "Ma" ( the looooong version ) all at no cost at
http://songza.com
After Friday's great day, we feel that S is going to be a
great swing trade over the coming weeks and could
have a huge break out after the $5.00 break.
Over the last week SIGA has had a ton of accumulation around
th4 $6 range and may be setting up for a massive break out over
the coming weeks.
PALM had a huge day and broke out well above $11.00, we feel PALM
is going to be a great momentum mover over the coming weeks and
will be able to break out into the low teens.
Your Competition Can Help Your Business
Tip posted at:
http://absurdsmartmarketingtips.blogspot.com/
Larry Potter
ATicketToWealth.com
Sunday, May 3, 2009
Friday, May 1, 2009
Selling Covered Call Options
Selling (or "writing") covered calls is one of the safest ways to generate extra income from the stocks in your portfolio. And due to the volatility in today's market, option premiums are currently much higher than their historical averages. As a "seller" of options, that works in your favor. This is a strategy that could easily and safely generate 20 percent annual income for you.
Selling covered calls is probably the lowest-risk form of options trading. It involves selling someone the right to buy a stock that you own at some time in the future. For this privilege, the option buyer pays you cash up front, thus lowering your cost basis for the shares you've purchased.
Here's how it works...
Let's assume you own 100 shares of stock ABC. The stock is trading for $10 and the July call options on it - with a "strike" price of $11 - are selling for $1. So by selling one call option on your 100 shares of ABC (each call option represents 100 shares), you immediately receive $100 in your account. Therefore, your cost basis on this transaction is $900 ($1,000 - $100).
There are three possible outcomes to this trade:
If ABC is trading for more than $11 before the option expiration date, the buyer would exercise his right to purchase the 100 shares of stock from you for $1,100. (He would then turn around and sell those shares, making a quick profit.) In this case, you would make 22 percent, based on your cost basis of $900
If ABC is trading for less than $11 but more than $9 at the expiration date, you would still own the shares - at a gain - and you would pocket the cash you received up front. You could then repeat the process to generate another round of income.
If ABC is trading for less than $9 at expiration, you would be holding your shares at a loss. But the income you received up front by selling the call option would offset that loss. And, again, you could repeat the process to recoup more of the loss and generate additional income.
The key to this strategy is to use it with stocks that you would like to hold for the long term. They could be stocks you already own or stocks you buy specifically for the purpose of writing covered call options - stocks you believe to be very safe and cheap. And you should employ this strategy at a time when option premiums are large - as they are now. Ideally, you will be selling options that expire within three to five months.
By writing covered calls on high-quality dividend-paying stocks, you can get an extra bonus. Best-case scenario, you keep the option premiums, you keep the dividends, and you keep the stock too!
Larry Potter
http://www.youtube.com/watch?v=lkJCsIMAiNY
www.ATicketToWealth.com
Selling covered calls is probably the lowest-risk form of options trading. It involves selling someone the right to buy a stock that you own at some time in the future. For this privilege, the option buyer pays you cash up front, thus lowering your cost basis for the shares you've purchased.
Here's how it works...
Let's assume you own 100 shares of stock ABC. The stock is trading for $10 and the July call options on it - with a "strike" price of $11 - are selling for $1. So by selling one call option on your 100 shares of ABC (each call option represents 100 shares), you immediately receive $100 in your account. Therefore, your cost basis on this transaction is $900 ($1,000 - $100).
There are three possible outcomes to this trade:
If ABC is trading for more than $11 before the option expiration date, the buyer would exercise his right to purchase the 100 shares of stock from you for $1,100. (He would then turn around and sell those shares, making a quick profit.) In this case, you would make 22 percent, based on your cost basis of $900
If ABC is trading for less than $11 but more than $9 at the expiration date, you would still own the shares - at a gain - and you would pocket the cash you received up front. You could then repeat the process to generate another round of income.
If ABC is trading for less than $9 at expiration, you would be holding your shares at a loss. But the income you received up front by selling the call option would offset that loss. And, again, you could repeat the process to recoup more of the loss and generate additional income.
The key to this strategy is to use it with stocks that you would like to hold for the long term. They could be stocks you already own or stocks you buy specifically for the purpose of writing covered call options - stocks you believe to be very safe and cheap. And you should employ this strategy at a time when option premiums are large - as they are now. Ideally, you will be selling options that expire within three to five months.
By writing covered calls on high-quality dividend-paying stocks, you can get an extra bonus. Best-case scenario, you keep the option premiums, you keep the dividends, and you keep the stock too!
Larry Potter
http://www.youtube.com/watch?v=lkJCsIMAiNY
www.ATicketToWealth.com
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