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Overconfidence
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 ...
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Beware of hype
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 ...
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Getting Even
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 ...
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Collars
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 ...
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Selling Option Premium
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 ...
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How to Get Started with Options
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 ...
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Comfort Zone
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 ...
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Recognizing a Mistake
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 ...
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Cost Basis
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 ...
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Financial Wisdom
Aug 13, 2010 A Bit of Trading Wisdom I found this quote while reading financial blogs, and thought it worth sharing: "Good traders know that opportunistic speculation is a process. Ignore any one single outcome, focus on the methodology that can consistently avoid catastrophic losses, ...
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Option Strategies
Aug 9, 2010 Recommended Option Strategies I recognize that not everyone who visits here trades exclusively for an investment club. Some of you trade individual accounts. Thus, I thought I'd share a list of my favorite option strategies. When mentioning this methods, the emphasis is ...
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Sell Stock Above Current Market Price
Aug 4, 2010 Sell Stock Above Market Price Even conservative investment clubs recognize when the time is right to sell a stock that has either underperformed or perhaps has reached the point at which the rate of growth is expected to decline. It's easy to ...
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Covered call writing III
Aug 2, 2010 Covered Call Writing III Expectations I've discovered that writers of covered calls often don't understand the rules of the game they are playing. This often leads to disappointment. Let's take the time to go over some basic details. 1. As the seller ...
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Covered Call Writing II
July 28, 2010 Covered Call Writing II Investment club members are usually conservative investors. They carefully choose stocks to buy and plan to hold investments for an extended period of time. If the company continues to grow, the value of the stock should increase accordingly. ...
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Covered Calls
I want to start trading covered calls and being a beginner, I would like some advice. Thanks for your help. Seth
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