Month: October 2015

The One Long-Term Options Strategy You Need to Know Now

Over the last several months, I’ve shown you several different options strategies that you can use to make serious money in the markets – simple call and put buys, bullish and bearish “Loophole Trades,” Straddles, and more.

But the constant in each of the strategies is that they have all been relatively short-term trade set ups designed to work within 20-30 days, with options that expire in about 45 days.

The mindset has been get in, get out and turn your profits pretty quickly – typically, the more efficiently you can use your capital, the better.

But I recognize that a lot of you come from a longer-term, buy-and-hold background. And I understand that this shorter-term, options-based way of generating income can be a bit much to take in as quickly as one would like.

So today, I’m going to show you a long-term options strategy you can use to boost your portfolio…

LEAPS is an acronym for Long-term Equity AnticiPation Securities (the P is often capitalized when it is written out to represent the P LEAPS to get the acronym to work).

These are options that allow for a longer time frame until expiration; you can buy many LEAPS as far out as two years and eight months before expiration.

They were created around 1990 and started out as only being available on stocks, but eventually became available on indexes and nowadays you can even find these on Exchange-Traded Funds (ETFs).

These are most often written, (but not exclusively) for January of whichever year up to two years out.  Right now, in October 2015, you can buy LEAPS on underlying securities for October and November, whichever month comes next in that issue’s option expiration cycle, as well as and January 2016, 2017 and maybe even 2018. The January 2017 and 2018 would be considered LEAPS.

LEAPS options are in truth no different than their shorter-term siblings in that they have an expiration date, they can be found for both calls and puts, and they can be exercised at a given strike price.

But they come with some pretty terrific benefits…

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Here’s What Happened With the Amazon “Loophole Trades”

Having a good, actionable plan on a trade idea actually come to fruition is a good thing. Acting in a timely fashion when that good fortune presents itself is even better.

Last week, we explored whether or not Amazon.com Inc.‘s (NASDAQ:AMZN) upcoming earnings announcement was a good opportunity to pursue our favorite non-directional trading strategy, the Straddle.

Ultimately, we decided – thanks to my Money Calendar data and my earnings analysis tool – that a Straddle was not the most profitable way to play the news event.

While volatility surrounding AMZN shares suggested that traders were worried about the company hitting estimates, history showed that AMZN was poised to make a bullish move after earnings. So Money Calendar gave us three different bullish “loophole trades” with varying levels of risk to choose from.

So today, let’s take a look at how each of those trades did following AMZN’s highly anticipated earnings announcement…

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How to Play Today’s AMZN Earnings Announcement

In light of Wal-Mart Stores Inc.‘s (NYSE:WMT) bombshell announcement that it’s expecting a 6% to 12% earnings cut over the next two years, expectations are high for Amazon.com Inc. (NASDAQ:AMZN), which reports earnings after the bell today.

The volatility I’m seeing with AMZN shares tells me traders are afraid Amazon might not deliver on earnings.

It’s always difficult to predict which direction a stock will break around earnings. The slightest bit of news could send a stock soaring… or crashing.

Last week, I showed you how to construct a Straddle, a non-directional trade that’s perfect for when you can’t tell which way a stock is going to move.

Ahead of earnings – and all the uncertainty and volatility that comes with it – is AMZN a ripe for a straddle?

Let’s take a look…

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Here’s What Happened With Our PCLN “Loophole Trade”

Last week, I gave all of my Power Profit Trades subscribers a chance to follow along with a trade generated by Money Calendar.

Our recommended “loophole trade” on The Priceline Group Inc. (NASDAQ:PCLN) was a rollercoaster – some of you got in on the trade, while many more probably missed out.

Yesterday, those of you who got in had the opportunity to close down that trade with triple-digit profits (in less than a week), per our exit instructions.

Today, I’m going to walk you through the trade step by step, show you why the trade got away from us, how it came back to us, and how a lucky few managed to walk away with huge profits.

Let’s get to it…

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The Best Non-Directional Options Strategy in the Markets

Many of the trading strategies I have shown you have been Directional Trades. That means the option position requires the underlying stock or ETF to make a particular move in price – either up or down – for the trade to work.

And that’s exactly what makes directional trades so challenging – trying to predict which way a potential trade will go is difficult. You can plan your trades carefully, follow your rules to the letter, and still the markets can intervene, turning a perfectly good prediction about a stock’s direction into a losing trade.

What’s more, indecision about a stock’s direction – and whether you want to buy calls or puts – can delay your trade, causing you to miss out on your predicted move.

How would you like a strategy that allows you to place a trade that doesn’t CARE which way it moves, just so long as it moves?

That’s just what I’m going to show you today…

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New Trade Instructions for My Next “Money Doubler”

I don’t do this often. But today I’m giving all my Power Profit Trades subscribers a chance to join in on the Money Calendar’s latest trade.

This one’s kind of special, you see…

It’s one of the most dependable “money doublers” out there.

We’ve made this exact same trade on this exact same stock twice before – in the last three months – and we took triple-digit profits both times.

Now it’s your turn. I’m going to walk you through our latest trade, step by step, with detailed instructions on how and when to enter the trade, how to limit your risk, and when to get out.  Of course, like all of my recommendations, this trade has the potential to return 100% in the next couple of weeks.

Here’s everything you need to get started…

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Directional Traders Will Love This Lucrative Strategy

Last week, I gave you a quick quiz – three simple questions to help you determine what type of trader you are.

Many of us are directional traders, which means we assess the direction of the broader markets or individual securities, and then trade accordingly, taking long positions we believe will go up in price and short positions on securities we believe will go down in price.

Now that you’re armed with this very important piece of information, many of you have asked: What’s next? What strategies do I use now that I know I’m – say – a medium-term rules-based directional trader (like me)?

Today, I’m going to show you a simple strategy that allows you to target lucrative options trades… and it relies on a tool we’ve talked about a lot in recent weeks: The Simple Moving Average (SMA). So I hope you’ve been paying attention!

Let’s get started…

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The Two Lines I Draw on Every Stock Chart

Prior to moving into trading full time I spent a number of years with a leading global home improvement company. One thing I learned in that culture is that a tool that serves multiple purposes is worth its weight in gold. Multipurpose tools are economical, time efficient, and allow you to accomplish much more than you planned due to its versatility.

In trading terms, one of the best multipurpose tools is the moving average – the average price data of a stock or ETF over a specific time period.

As I showed you recently, you can use a stock’s Simple Moving Average (SMA) to determine its direction. If the moving average line is on an incline going up from left to right, it tells you the stock is in an uptrend.  If it slopes down from left to right, it tells you the stock is in a downtrend.

But this versatile technical trading indicator is like a Swiss Army knife for traders… and it is one of the go-to technical indicators in my trader’s tool chest.

Let me show you what else it can do…

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The Secret to Using Stop Orders to Take Profits

This week we talked about different order types and how traders can use them to maintain a level of control over their trades even when they can’t watch the markets. They can assess their downside risk tolerance ahead of time and set their stops orders accordingly. But we didn’t really cover one of the most important – and perhaps most frequently issued – types of orders.

Stop orders.

A stop order is an order to sell a security at a given price. Some traders use dollar-based stops, others use percentage-based stops (not to mention the all-important trailing stop, which adjusts to lock in profits as your trade moves up or down).

But here’s the secret not a lot of traders know…

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Find Out What Type of Trader You Are… and Why It’s Crucial to Your Success

All over social media there are numerous quizzes and surveys that ask you to go through it to find out what your spirit animal is, what your ideal man/woman is, what your favorite pet is, what superhero you are…

But here’s one that’s much more interesting and useful!

When it comes to trading, determining what type of trader you are will help dictate what type of trading strategy you use and how often you use it.

The good news is, it’s pretty easy to figure out what kind of trader you are. In fact, it’s almost as easy as taking a quiz on social media… except it can be a lot more lucrative too.

Today, I’m going to tell you how to determine what kind of trader you are, and why it’s absolutely crucial to your success in the markets…

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