Jerry, You are correct. You have a short-term capital gain in the amount of (premium, less commission). And for tax purposes, the cost basis remains at the original $2,000. I was referring to the informal bookkeeping in which the investor can consider that he/she paid ...
Aug 16, 2010 Recognizing a Mistake Most new traders consider any trade that loses money to be a mistake. Similarly, any winning trade is deemed to be a good trade. I hope it's obvious hat this cannot be the right way to look at investing ...
Aug 18, 2010 Comfort Zone Here's part of my investment philosophy: When initiating a new position most investors recognize the importance of placing a trade they believe will produce a profit. When you are satisfied with both the reward potential and possible loss for a ...
Aug 23, 2010, How to Get Started with Options It's much more educational and fun to learn something useful about options education or how to use options to make some money. However, before doing that you must have a brokerage account with permission to trade ...
Aug 25, 2010 Selling Option Premium Most traders who make money when trading options choose to sell, rather than buy option premium. If you accept that statement and wish to be part of this group, it's essential that you take the time to understand how ...
Aug 28, 2010 Collars One of the most conservative option plays is called a collar. The name is derived from the fact that there is a limit (or collar) on both the maximum profit and the maximum loss available from the position. Collars are not ...
Aug 31, 2010 Getting Even: A Trader's Blind Spot One of the characteristics of a trade that loses money is that the trader often feels hat he/she made a mistake. It is a misconception. A trade should be defined as 'good' when the rationale behind ...
Sep 3, 2010 Beware of Hype In the options world, there are many people who lie, cheat and essentially steal. However, that's not different from almost any other business. Often, it's a cinch to see who the phonies are. For example, when you see someone ...
Sep 8, 2010 Overconfidence Everyone loves to earn profits when trading. After all, that's the purpose of entering an order and making a trade. One aspect of being profitable is that it brings confidence. That's a good thing. When you believe you understand what you ...
Beth, Thanks for writing. I run every post through a spell checker and re-read every word. Sadly, when the true word (example 'that') is truncated to another 'real' word: 'hat,' the spell checker cannot do the job. I also run each post through voice recognition ...
Sep 15, 2010 Stagnant Market The stock market has not been very volatile over the past few months. True, it has made some decent one day moves, but they are not repeated and they have been in opposite directions. Unless your timing was outstanding, it ...
Sep 17, 2010 Options Education Education: Activities that impart knowledge or skill. When I work with investors or write blog posts and books, my objective is for the reader to learn something he/she does not already know, thereby adding to his/her knowledge. So what do ...
Sep 20, 2010 Professional Investment Advice My impression is that most investment clubs enjoy the stock selection aspect of operating an investment club and would not be interested in the opinion of someone who offers professional advice. My opinion is that those who use options ...
Sep 22, 2010 Hedging Your Portfolio in a Rising Market Most investors get very bullish when markets are rising. And why shouldn't they? They feel very clever for being invested - and feel even better when their careful stock research has them outperforming the market ...
Sep 30, 2010 How Many Strategies? There was a recent discussion concerning whether it's best for a trader to concentrate all efforts on a single strategy - in an effort to become an expert trader using that method - or expand one's knowledge, allowing for ...