Month: August 2015

My Top 10 Stocks for Options Plays This Week

The biggest market drop in recorded history on Monday… a wild end-of-day plummet on Tuesday… a huge up day on Wednesday… and more bullish action today?

Talk about opportunity!

Right now the only real barrier to trading profits is a stock that doesn’t move.

So in times like this, I like to use a really great tool that identifies what I call my “Top Movers” – the stocks and ETFs that have had the biggest % move and best correlation to the market. They’re listed at the right. In this way I can focus on finding the best stock with the best option trade, with the best potential to double in value on the smallest move in the stock.

That’s a lot of “bests.”

This is a really simple tool, and I know you’ll like it.

To continue reading click here


The One Trading Strategy You Needed for Yesterday’s Crash

After yesterday – the worst trading day in recent memory – I want to get serious with you about risk.

If you get this right, you could have banked serious profits yesterday.

And I want to make sure you DO get it right.

One of the biggest mistakes investors can make is being too heavily invested in one trend, one sector, or even a single stock. Diversification is a tool that traders use to mitigate risk. The thinking goes, if you spread your investments out, your gains will neutralize your losses and you will yield better returns over time.

Your financial advisor has probably encouraged you to diversify your holdings by buying different stocks in different sectors, some commodities, some gold, and even some downside protection. But it’s difficult for the average investor with a limited budget to diversify in a way that truly cuts risk – experts say you should own somewhere between 25 and 30 stocks for it to really work.

That’s great – if you can afford it. But there’s another way to diversify that your broker or your financial advisor probably won’t tell you about, and it’s a great way to truly slash your risk.

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Why I Like to “Shorten” My Trade (You Will Too)

Last week I loaded you up with information on options timing: the factors that go in to the pricing of an option, what cycles options have, and the option Greeks that determine the premium.

I hope that one didn’t leave your head spinning!

This timing stuff is important if you’re going to put the power of options to work for you.

Now I want to reveal my favorite timing strategy – one I’ve used for over 25 years to “ring the cash register,” and one you can start using right away.

If you’re feeling uncertain about any of this timing, you can always follow along with the “money doublers” I show you here occasionally, or trade along with my Money Calendar Alert subscription service if you’re a member there.

But if you’re a do-it-yourselfer or just the type of person who likes to drill down and see how things work – you’ll love today’s lesson.

Here’s why I like to “shorten” my trade timeframe…

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This Market Shape Is More Telling than a “Death Cross”

The major U.S. indices open today right about where they started the month of August.

The Dow has lost -0.85%.

The S&P 500 is down just -0.09%.

The Nasdaq gave back -0.84%.

If you are a straight “buy and hold” equity investor, you probably haven’t made too much money this month. But if you’re an options trader, you could be taking profits all along the way, like we have!

So what’s the rest of the month have in store for us?

If you love technical analysis as much as I do, it probably has not escaped you that the Dow Jones Industrial Average shows what is known as a “death cross.” (Click here for a closer look at that.)

That’s a trading term for when the 50-day Simple Moving Average (SMA) crosses below the 200-day SMA, as it did last week, on August 10.

A death cross gives an indication of some weakness in the average.

However, its meaning isn’t as clear cut as you might think. Will it mean lower prices? Or will it simply be a short-term cross that will rectify itself as prices go higher, eventually bringing the 50-day SMA back above the 200-day SMA? Only time will tell.

I’m looking at this shape instead…

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The One Options “Timing” Lesson You Need Now

If you’re just getting started with trading options, you may run into a financial adviser or broker telling you stay away from them.

You’ll hear that options are “too risky!” (which we’ve already proven is untrue) or “too complicated!” (also untrue)…

Or this …

“Options are fixed-time investments that expire on a specific date!”

That is true. But that “fixed time” feature doesn’t have to work against you. Quite the opposite. It gives you the flexibility to focus your trade the way you want to – a flexibility you don’t have with a straight long or short equity position. But you need to know how to use it.

If there’s one thing you need to know about options, it’s how to handle this “fixed time” aspect of trading them. Picking the right expiration date can make the difference between a small 15% gain and a huge 300% winner.

So today I want to spend some time to help you get this all down pat, so all your broker rep’s will need to do is provide you the most efficient means to execute your orders. (Heck, if you are using an online platform, you may never have to talk to them at all.)

And then look out for my email next week, when I’ll show you how to focus your trade by picking the right expiration, as well as my personal favorite timeframe for trades.

Let’s jump right in.

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The Best Thing That Can Happen to a New Trader… Is a Loss

This may surprise you, but I believe one of the best things that can happen to a brand-new trader is to take a loss.

Don’t get me wrong. It’s great to win, like we have, and be profitable on your first trade, first five trades, or even your first 10 trades. But an immediate winning streak like that may be setting you up for disappointment later.

Why?

Too much success can give new traders an overinflated amount of confidence. You start to think that trading is easy and there isn’t much to it. That whatever you used to choose the winning trades is ALL you will ever have to use; that you found the magic bullet to trading success. You start taking more and more risks… and then disaster.

Look, I can speak to personal history that all I have mentioned is possible… because it happened to me when I started out.

I look back and think if I had suffered a loss or two or more to start, I would have had to learn earlier what it takes to manage a trade when it goes against you.

That’s what I want to show you today, with a follow-up on the GMCR covered call idea.

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I See AAPL at $200/Share… Here’s What to Do about It Today

We all know that tech giant Apple Inc. (NASDAQ:AAPL) did a seven for one (7:1) stock split on June 9, 2014, that took the price from about $645/share down to $94/share.

But what you may not know is that this move set up AAPL for something really incredible. And I’m going to show you how to trade it, the Power Profit way.

It has to do with the stock split.

Pundits will tell you over and over again a stock split does nothing to the valuation of the amount of equity of AAPL stock in your portfolio. If you had $2,000 worth of stock before the split, you have $2,000 worth of stock after it splits (just more shares). Why all the hoopla?

The hoopla comes from past case studies of many a stock that has split, only to regain its pre-split price within one to three years.

There is where the excitement lies. The very real possibility of doubling your money within 12-36 months.

Or in this case, the possibility of increasing it by 7x…

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This May Be the Perfect Stock to Sell Covered Calls on This Week

Last week I showed you why I like covered calls so much.

I know many of you like them too, because the feedback I received for the covered call article was overwhelmingly positive. And that makes perfect sense.

Covered calls are among the simplest options strategies. They’re easy to understand and easy to execute. Best of all, they give you a safe way to immediately juice your return on investment (or ROI) on stocks you already own (although there’s one instance where you do NOT want to use them – keep reading for that).

So today I’m going to follow up on my promise to give you a specific example of a covered call opportunity to act on.

I think you’re going to like this trade.

Here’s the perfect stock to sell covered calls on this week.

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