Knowing a few basics can save you a lot of time in figuring out spreads. This report gives you the tools to trade spreads with confidence.
We are proud to say that we are the only options service available to retail investors that provides state-of-the art volatility forecasts on virtually the entire equity options market (2,500 + common stocks). These volatility forecasts are important, because they tell you whether an option is favorably priced for a particular strategy.
Many of our option subscribers also have access to the Value Line Investment Survey online and to its Stock Screener. What these subscribers may not know is that they can use this Stock Screener to select a list of stocks and then automatically transfer their selections to our Option Screener.
This week’s spotlight for option opportunities looks at International Business Machines (IBM), whose earnings for 2011 are now estimated by Value Line analyst Theresa Brophy at $12.95 a share, which would be an increase of somewhat over 12%.
Much of what you are told about covered call writing, even by many so-called “experts,” is wrong – or, at least, less than 100% accurate. This week, we explore ten myths about covered call writing that you may have heard. Perhaps the key word here is “always,” as in always explore your alternatives - rather than always pursue exactly the same strategy.
The mere mention of options can send shivers down the spine of investors who have only heard about them through the news. To be sure, when used imprudently, options can do a great deal of damage to a portfolio. But, when used prudently, options can be a valuable addition to an investor’s toolbox. Covered calls are probably the best starting point for adding options to your portfolio.
This is definitely a market in which you need to be hedged. The S&P 500 and the Dow are down about 11% over the past month and only about 2% above earlier January lows. On the other hand, some stocks are doing better than others. Value Line’s rank 1 common stocks are down only about 3.5% as investors are tentatively looking for growth potential. In what may be a “stock picker’s” market, holding good stocks and protecting them with puts may be the way to go. In this week’s report, we cover in some detail how to hedge stocks you own with puts. Even when markets are volatile (as they are now), you can tailor your put insurance to suit your expectations and your tolerance for risk.
If you are already familiar with options (what they are, what gives them value, the terms that describe them and how they are traded), you can probably skip this chapter. However, if you are uncertain about some of the terms or concepts, this chapter will probably answer your questions. We start with some basic definitions.