Month: July 2015

Plucking Ripe Profits from Apple

It’s a time-tested aphorism:  An Apple a day keeps the doctor away.  This week, we saw how properly timed options strategies came to fruition with Apple Inc. (NASDAQ:AAPL).

Can AAPL shares in your portfolio keep your account in good financial health?  I answer with a resounding “yes,” as would many investors who are happy with the way their AAPL shares have performed over the long haul.

But what about AAPL options?

Options traders also have benefited from this innovative high-tech stalwart.  Some have even made it a habit of trading AAPL daily (perhaps the saying should be changed to: “an AAPL trade a day…”).  After all, staying poised to trade support and resistance and other short-term technical patterns or signals is in their best interest.

Let’s be clear: I’m not here to make a day trader out of you.  Even for advanced traders, day trading requires considerable skill and nerve to pay off over the long haul.

That said, I want to show you the highly profitable outcome of a Money Calendar AAPL trade that I recommended on July 9.

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The Loophole Trade and Priceline: A Potent Combination

Loophole trades are well suited for the market volatility we’ve been experiencing these past few weeks, as financial and geopolitical uncertainties generate anxiety among investors.

In the previous issue of Power Profit Trades, I explained why Implied Volatility (IV) is a strong incentive for options traders to consider a loophole trade.

This issue, I focus on another compelling reason for the loophole trade: reduced cost and risk.  I also recommend a specific loophole trade and explain its details in a training video embedded below.

When teaching my students, I run scenarios with them simulating a $25,000 account of which no more than 2% of the $25,000 is risked in any one trade.  The math works out so that no more than $500 is risked on any one trade.  In this scenario, $500 risk translates into a $5.00 option.  One contract = the right to buy or sell 100 shares of stock, which means a $5.00 option equates to $500.

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