Stock Ideas 
Stock Ideas Investors Daily Edge How to Trade Options in this Market
Stock Ideas Investors Daily Edge How to Trade Options in this Market 
Market Watch
| We added Synchronoss to the portfolio for the August issue of Rising Star Stocks. The buy price was $7.43. As of Friday's close, it's trading at $29.77. That's a profit of 394 % in a year my friend. | |
| More... |
Most Popular
Login Form
| How to Trade Options in this Market |
| Friday, 14 March 2008 | |||||||||||||||||||||||||||||
|
I received a few emails this week regarding my IDE article on Monday talking about the trade I recommended to K.I.S.S. subscribers. The emails agreed with the article, saying that the way to play this market is with short-term trades and with options. As a follow-up to that article, I wanted to show you how beneficial trading options can be in a market like this. First, options should not be the only investment vehicle you use. I recommend that you keep the bulk of your money (75-80 percent) in long-term investments and use the rest to trade options. If we look at last week’s trade, you can see how this would have worked had you been following such a strategy. For illustration purposes only, let’s say that you have $100,000. Portfolio A allocates 75 percent to an index fund and the rest to options. Portfolio B is allocated entirely to an index fund. During the course of time when K.I.S.S. subscribers were holding puts on the AMEX Diamonds Trust (DIA), the Dow fell just over five percent. Let’s use a table showing the returns of each portfolio.
As I said before, these portfolios are for illustration purposes only, but the recommendation to K.I.S.S. subscribers was real, as was the five-percent drop in the Dow. This example shows how the leverage of options can work for you, even while you keep the bulk of your money in longer-term investments.
Respectfully, Rick Pendergraft P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
This investment news is brought to you by Investor's Daily Edge. Investor's Daily Edge is a free daily investment newsletter that is delivered by email before the market opens. It's published by Fourth Avenue Financial, a subsidiary of Early To Rise (an affiliate company of Agora Publishing). In each weekday issue you'll receive practical strategies for protecting your portfolio and multiplying your money. You'll also learn about undiscovered opportunities in emerging sectors and markets, deeply discounted stocks, recommendations for bonds, cash, commodity and real estate investing, and top ETFs. To view archives or subscribe, visit Investor's Daily Edge .
|
|||||||||||||||||||||||||||||
| < Prev | Next > |
|---|
