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Ideas and Strategies on Investing.

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Trading Options with the MACD

8/30/2013

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 "We simply attempt to be fearful when others are greedy, and to be greedy only when others are fearful."
-- Warren Buffett

  Every day I’m looking at stock charts for specific situations in which to sell options to generate income for my accounts. Options to me are a short term trading strategy so there’s really no reason to do much fundamental analysis of the underlying company. This is really a chart based trading strategy and I like to enter and exit these things within the limits of a work week, if possible. I like weekends off just like everyone else.

  My two favorite stock price indicators for trading options are Bollinger Bands and the MACD. Bollinger Bands I’ll leave for another discussion. Right now I’d like to lay out my strategy for using the MACD. As I pointed out in an earlier post, crossing the signal line is most effective when the MACD is below the zero line and crosses the signal line from below or above the zero line and crosses the signal line from above. I also pointed out that correctly crossing the signal line is the initial trading signal and subsequently crossing the zero line is confirmation of that decision. Finally, I warned that an MACD crossing a signal line from below when it is above the zero line and crossing from above when it is below the zero line is generally a false signal and shouldn’t be used as a reliable trading signal.

  As I’m reviewing stock charts I’m initially looking at the stocks that I already own for a chance to do some covered call writing. Afterwards I look at charts of stocks that I don’t currently own for the chance to do some covered put writing. Both strategies are generally executed for the sole purpose of generating cash for future stock buys. As you can see, this becomes one of the engines that fuels the portfolio.

  When I’m looking at charts of stocks that I already own, I’m looking for an MACD line that is above the zero line and starting to flatten out. This tells me the momentum of the stock price is waning. What’s even better is if the MACD has not only flattened out but started to fall sufficiently enough to cross below the signal line. In that case the momentum is beginning to deteriorate rapidly. It is at this point when the probability of successfully selling covered calls is high. If the MACD continues to fall and crosses the zero line then the trade will most likely be a success. At that point I can either buy the calls back at a price lower than I sold them or simply let them expire worthless. Either way this would be a successful trade.

  When I’m looking at charts of stocks that I don’t own, I’m looking for an MACD line that is below the zero line and starting to flatten out. This tells me that the momentum of the stock price is improving. What’s even better is if the MACD has not only flattened out but started to increase sufficiently enough to cross above the signal line. In that case the momentum is beginning to improve rapidly. It is at this point when the probability of successfully selling covered puts is high. I should mention at this point that I do not sell naked puts. All of my put selling is covered with cash. Now if the MACD continues to increase and crosses the zero line then the trade will most likely be a success. At this point I can either buy the puts back at a price lower than I sold them or simply let them expire worthless. Either way this would be a successful trade.

  So far, so good. In both cases above the trade was successful. The stock acted exactly like you expected it to. The options were sold, the stock moved appropriately, and money ended up in your account. And if the whole thing happened during the span of one work week, you’d have the weekend free for other things (like photography!). But what if it didn’t go as plan? That’s when your contingency plan or exit strategy is executed. I simply would not go into a trade like this unless I'd have thoroughly thought out my exit strategy and have it laid out well in advance of the trade.

  I'll save my thoughts on exit strategies for another blog post.

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MACD

8/29/2013

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  Moving Average Convergence Divergence (MACD)

  Every investor has his favorite or favorites when it comes to stock market indicators. Most of them fall into one of two categories - momentum or oscillators. Momentum indicators are speed and strength or rate of change indicators that are designed to visually represent the speed and strength of a price movement whether up or down. This is usually done by comparing the latest closing price with an earlier closing price.  An oscillator is a visual representation of trend that has upper and lower limits for determining overbought and oversold conditions. The minimum is usually zero and the maximum is usually 100. An oscillator at an extreme is usually about to reverse momentum.

  One of my favorites is the MACD (Moving Average Convergence Divergence). This indicator is a simple and effective indicator and I like indicators that are simple and effective. Why make things more complicated than necessary? The MACD was designed to calculate a line using the difference of two moving averages. This line is calculated by subtracting the 26 day exponential moving average from the 12 day exponential moving average. Once that is calculated and plotted, a 9 day exponential moving average signal line is calculated and plotted along with the MACD. 

  As the MACD crosses back and forth across the 9 day signal line it is interpreted that a change in momentum for the underlying price of the stock has occurred. I personally use this market indicator to determine the speed and strength of the momentum of the stock price of the company I am charting as well as the stock price’s change in momentum. As the MACD converges and diverges from the signal line I can visually see the change in the speed and strength of the stock’s momentum.

  Here’s one of the little known pieces of information that I’ve learned using this indicator over the years that is detailed in Gerald Appel’s book “Technical Analysis, Power Tools for Active Investors” but you really have to read it close to get this point. Crossing the signal line is most effective when the MACD is below zero and crosses the signal line from below or above zero and crosses the signal line from above. Crossing from below when it is above zero and crossing from above when it is below zero is generally a false signal and many beginning traders make the mistake of trading this false signal. In addition, the MACD crossing the signal line is the initial signal and the subsequent crossing of the zero line is a confirmation of that signal.

  For additional information on this indicator I refer you to the experts at StockCharts.com.     They have an area of their website that is called their Chart School and they have a specific page dedicated to the MACD. There you’ll find a vast array of information on market indicators as well as chart analysis. It’s well worth a look but you need to set aside a little time to do it.

  Before I end this I’d like to personally thank Gerald Appel for developing the MACD. I have not only used it extensively over the years to make money in the stock market but I have also used it to avoid losing money as well. Thank you Mr. Appel.

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Double Entry Deviants

8/29/2013

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  "Did you ever hear of a kid playing accountant – even if they wanted to be one?"
-- Jackie Mason, Comedian.



  I do not have, nor did I ever want, an accounting degree. I have a general understanding of accounting principles and I can read Income Statements, Balance Sheets, and Cash Flow Statements but I get a headache when I look at them for very long. What I’m really interested in is Total Revenue, Net Profit/Loss, and Amount of Dividend Payment. If revenue is increasing, profits are increasing, and dividends are increasing at least annually, then I’ve found a stock I’m interested in. And that's all the accounting I need to know.

  The importance of increasing dividends to me is simply to increase my annual income year after year. Increasing the dividend is important to companies because if done for a number of years it puts the company on certain lists. These lists are the Dividend Challengers, Dividend Contenders, Dividend Champions, Dividend Aristocrats and even the Dividend Kings. It is these lists that attract investors who will buy, support and even increase the stock price and market value of the entire company. Stay on a list and investors will notice you. Fall off a list and you’ll be ignored.

  But dividends aren’t everything. Revenue and Profit are also important. If a company is not increasing their revenue and profit then eventually their dividends will have to be cut. Revenue and profits won’t necessarily increase quarter over quarter but they should be increasing year over year. And an occasional set back won’t hurt the company if there’s an explainable and unusual reason, but it should be relatively rare. I like stocks that are steady and consistent.

  Sometimes companies will continue to increase their dividends annually even though their earnings and profits are starting to slip because they want to maintain their status on one of the lists above. That may not make sense initially. If you understand that management is usually invested in the company through granted stock options, then you understand that if the company falls off one of the lists above, the stock may fall and that’s not good for management’s financial health.

  If earnings and profits begin to fall significantly, management will eventually have to make the decision on whether to pay themselves their hefty salaries or pay the dividend to their stockholders. Guess who’s going to lose on that decision? Initially management will simply continue the dividend at its current rate to hide the fact that the business is deteriorating but if revenue and profits continue to fall you can expect the dividend to be cut next. You can also expect that the last thing that management will cut is management’s salary!

  This is why I check quarterly earnings reports for all my stocks. I want to know that their earnings and profits are increasing, and if not, why not? I want to know if they’ve increased their dividend sometime in the last 4 quarters, and if not, why not?

  If I can’t figure out why, I sell the stock. Immediately. I may not be the first one to know that things aren’t going well with the company but I don’t want to be the last to know. That would be a disaster to my financial worth. I then take the money from that sale and invest it in another stock that’s performing as it should. Which for me means going back to the lists and my first stop is the list of Dividend Aristocrats.

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Covered Call Writing

8/28/2013

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  "One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute"
-- William Feather, American Publisher and Author.

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  I discovered option trading early in my trading career. I was fairly young and option trading was new and exciting. A lot of the traders at the time weren’t interested because they thought this was at the fringe of the trading profession and resembled gambling more than trading. In other words, it wasn’t a respectable way to make a living.

  To me it was intriguing and I wanted to understand how options worked. The more I found out about them the more fascinated I became. It seemed like I was creating money out of thin air (which of course I wasn’t). But it was also bewildering because options allow for so many different possibilities. Options represent both Hope and Protection combined with the security of Limited Risk for buyers. But for buyers options present such a low probability of success. For the seller of options it’s just the opposite. There’s no security and there’s virtually unlimited risk, but the probability of success is huge.

  So I asked around to try to determine who enters these kinds of transactions. And the answer I got for the most part was, “I don’t know. People who like to trade, I guess”. And as I delved further into the question, I discovered that at the time, and this was 30 years ago, most options being traded were covered call options and most of those were being traded in Florida.

  Today covered call options are generally referred to as a “buy-write” transaction. An investor buys the stock and then writes a call. To understand why these were occurring most often in Florida you have to understand what a covered call option is. A “Covered Call” is an options strategy where an investor who currently holds a long position in an asset (owns the stock) sells a call option at a certain (strike) price for a certain amount of time on that stock to generate income (a fee). If the stock remains at or below the strike price at the expiration date, the call seller keeps the income (fee) and can write another call. This allows the individual to continue to receive a steady stream of income as long as the stock is not called away. If the call is written well above the current price of the stock and the stock is called away, it’ll be called away at a profit and the seller also keeps the option income (fee). Nice, huh?

  Now back to why Florida. Well, Florida has a lot of old people. And old people are the ones that have a lot of investments. People that own a great amount of stock are by nature thrifty (as in cheap). They’ve accumulated this wealth and they don’t want to part with it unless they absolutely have to. But they want their investments to grow and they want to live off the dividends that are distributed. It’s just that sometimes dividends are just not enough for these greedy people. With covered call writing, the Florida elderly suddenly had another opportunity to make money off the stocks that they already own. And remember, selling options has a high probability of success.

  Having learned this, whether it was true or not, I was convinced that I needed to emulate these old rich people because that was my goal in life – to be rich when I got old. It’s still my ambition. I want to be rich when I get old someday.

  To this day I still buy stocks for wealth creation and dividends. And like the old people of Florida, I sell covered calls off my positions. It’s been a great way to increase my income above and beyond simply receiving dividends. And it’s the money I receive from dividends and derivatives that fuels my portfolio these days. 

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Dividend Aristocrats

8/26/2013

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 "After all, the chief business of the American people is business.  They are profoundly concerned with producing, buying, selling, investing and prospering in the world."
-- Calvin Coolidge, 30th President of the United States.

  When I start looking for potential candidates for investment I start by reviewing the Dividend Aristocrats. The S&P 500 measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years. The result of this scrub creates the list of stocks known as Dividend Aristocrats. This list is updated monthly by the S&P 500. 

  The stocks below were taken from a website titled Dividend Yield - Stock, Capital, Investment. This website contains a number of lists that are well worth researching. I have eliminated the one non-US based stock because, for the most part, I'm not interested in foreign investments. There's plenty of money to be made in this country without looking overseas. Also financial accounting principles are not as open and straight forward as here. I assume this list is accurate as of 1 Aug but I cannot verify that. Also, this list may change once it is updated on 1 Sep. However, that said, this is a good place for me to start my research. Everyone has to start somewhere.

3M Co.
Abbott Laboratories
AbbVie
AFLAC
Air Products & Chemicals
Archer Daniels Midland
AT&T
Automatic Data Processing
Becton, Dickinson
Bemis Company
Brown-Forman
Cardinal Health
Chevron
Cincinnati Financial
Cintas
Colgate-Palmolive
Consolidated Edison
CR Bard

Dover
Ecolab
Emerson Electric
Exxon Mobil
Family Dollar Stores
Franklin Resources
Genuine Parts
HCP
Hormel Foods
Illinois Tool Works
Johnson & Johnson
Kimberly-Clark
Leggett & Platt
Lowe's Companies
McCormick & Co
McDonald's
McGraw Hill Financial
Medtronic

Nucor
Pepsico
PPG Industries
Procter & Gamble
Sigma-Aldrich
Stanley Black & Decker
Sysco 
T. Rowe Price Group
Target
The Chubb Corp
The Clorox Co
The Coca-Cola Co
The Sherwin-Williams Co
V.F. Corp
W.W. Grainger 
Walgreen
Wal-Mart

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Retirement Income

8/25/2013

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  "Today people have to be self reliant if they want a secure retirement income."
-- Scott Cook, founder of Intuit.

  According to the 2011 Census Bureau the median income in the United States was $50,054. From about 1999 until 2007 it hovered between $53,000 and $54,000 and since 2007 it has steadily fallen to the level it is now. I think if you asked a thousand economists why this has occurred, you’d get a thousand reasons why, and none of the reasons would change the facts. What is important to me is knowing that half of the people in the US make more than this amount and half make less. It’s how the word median is defined and it’s the amount that would allow for a comfortable retirement.


  The Census Bureau’s definition of poverty for 2012 was set at $23,050. This obviously is the point at which I would no longer make it on my own and would need government assistance just to make ends meet. What’s important to know here is that I have to expect to make more than this in retirement or I’ll keep working regardless of my age. I don’t think living in poverty is how I want to spend my Golden Years.

  According to the World Health Organization the average life expectancy in the US for men is 76 years and for women it’s 81 years. I guess based on this it’s better to be a woman in the US. Depending on how old you are right now, those numbers may be good news or bad news. At my age those numbers are right around the corner. 

  The normal person would quickly come to the conclusion that if their income at retirement is expected to be at the poverty level, then they need to keep working. I can’t afford to retire if I can’t make more than that amount. However, if I calculate that my retirement income would be at least the same as the median income in the US, then maybe I can start making plans to retire. The logic would be that if I can make  the same level of income during my retirement as the average (median) guy makes working his tail off, then why not start to at least think about retirement. It won’t be a lavish retirement at this income level but at least I could live as well as the average (median) guy walking the street. That wouldn’t be a bad retirement.

  Here comes the hard questions. If I live to be 76 or beyond, will the money I project into retirement keep up with inflation? Will my purchasing power be the same as I get older? What about savings for emergencies? These are all hard questions and questions each one of us has to deal with individually.

  The answer for me has always been investing in companies that increase their sales, earning, and dividends over time at a rate faster than inflation so that my purchasing power remains the same or increases over time. That hasn’t been a problem during the last 6 years because we’ve actually had deflation. But history tells us that inflation will occur again and if I don’t have increasing dividends, my purchasing power will decline.

  So what size portfolio generates $50,000 in dividends each year? That’s a near impossible question to answer because there are so many variables to consider. If your stocks generate an average of 4% in dividends, you need a portfolio of $1.25M. If your stocks pay only 3% in dividends, you’ll need $1.67M. That’s a large portfolio. (If you’re lucky enough to have a company sponsored retirement or will receive Social Security Benefits to augment your dividends then your portfolio could be considerably smaller.)

  This is why I like investing in the right stocks which fall into a group of stocks called dividend aristocrats. Great companies care about their shareholders as well as their customers. They take care of their shareholders because the shareholders are the owners of the company and expect to share in the profits of the company. This is the reason why individuals invest. And once you’re invested in the right companies all you have to do is monitor them to make sure they stay great companies and great investments.

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Patience

8/24/2013

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PicturePatience
  “He that can have patience can have what he will.” 
-- Ben Franklin

  In the stock market it’s easy to make money. Really. And in the stock market it’s easy to lose money too. The only hard part is holding on to your hard earned money. That's near impossible.

  There’s an old adage on Wall Street that says if you want to double your money, fold it in half and put it back in your pocket. There’s a lot of funny wisdom like that floating around the investing community that was learned through financial misery.

  Investor’s make most of their money by doing nothing. That’s right, doing nothing. When I finally discovered that fact I knew this was the type of career/hobby I wanted for myself. But doing nothing is not natural and to gain the skill and expertise to do nothing takes years and years of practice. In fact, as you get older and start to take naps during the day, it’s a sure sign you’ve perfected this advanced skill of doing nothing. And at that point in your life you’re a natural born investor.

  Patience will make you wealthy. But what are the techniques involved in mastering this skill. Well, napping is one. Sitting on your hands is another. Having teenagers will surly teach you patience as well as try your patience. And sitting outside a restaurant with one of those little boxes waiting an hour or so for those little lights to swirl to let you know your table is ready will certainly help you learn patience.

  But patience will not get you to the promised land by itself. Thinking is also involved. So if thinking and patience are not your thing, investing is probably not your thing either. Maybe your future is in commodities, like recycling aluminum cans.

  Thinking is important because thinking is that difficult process by which you determine which company or companies you’re interested in. Thinking involves pulling together all your research, screening, and decision making processes into one specific action -- buying the right stock. I’ve discussed this earlier in a post entitled Finding the Right Stock and if you need to review it you can find it here. Thinking will also crystalize why you bought a particular stock when doubts enter your mind later on down the road.

  Patience is important because it is what gets you into the right stock at the right price and keeps you from overtrading. Commissions are the bane of traders and overtrading just increases the number of commissions you’ll end up paying. Brokerage houses love traders because they make a living charging commissions on trades. Investors make a living by collecting dividends. Investors become wealthy by watching their stocks increase in value as they hold them. Investors get rich through patience.

  If you find and buy the right stock at the right price there’s no reason to ever sell it. Just collect the dividends and watch your wealth grow.

  Live long and prosper.

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An MBA won't help

8/23/2013

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PictureBuy or Sell.
  Stock charts are historical records of human behavior and are beautiful works of art to someone who has studied human behavior (I have my Master’s Degree in Social Psychology from NC State University). Those charts are the visual end result of the human decision making process. If we can discover the reasoning behind those decisions and act upon that knowledge in a timely fashion, the American Dream is within our grasp. 

  Every stock price that is quoted has both a bid and an asking price rather than one single price. There is someone who is actually bidding the bid price and someone else who is actually asking the asking price. The price you see when you look up the price of a stock is really the price that was transacted on the last trade, not the current bid and ask price. In order for that last trade to have occurred, there had to have been an agreement on price between a buyer and seller. If buyers are locked at the bid price and sellers are locked at the asking price, then trades would never occur. And if no trade ever occurred, there would be no volume in that stock. The act of trading is what creates volume.

  Seeing the volume charted along with the stock’s price provides me with a clue in determining the amount and direction of the activity occurring in the stock. Another clue is knowing what the average volume is for a given day so I can know if today’s trading volume is above or below that daily average. Since I know that trading creates volume and volume only occurs when one of the traders breaches the spread between the bid and ask, I know that someone had to have flinched. As the trading volume increases I am seeing an increasing number of people who are flinching and completing the trade. 

  If volume starts to increase and the price starts to rise, I’m seeing buyers cross the spread and bid the stock higher. If volume starts to increase and the price starts to fall, I’m seeing sellers cross the spread and push the stock lower. Regardless of why these traders are creating volume and pushing the price higher or lower is something I may never know but I can visibly see what they are doing right there in the chart. I can see people act upon decisions they have made right there on the chart in real time. And the more volume I see tells me that an increasing number of traders are coming to the same decision and acting on that decision by trading the stock. Charts are a fascinating view on the decisions and behavioral patterns of stock traders. 

  Remember how all your life you were told to be a leader and not a follower? In the stock market being a leader is the quickest way to bankruptcy. At some point I’ll write more about the concept of trend following but for now the idea is to figure out which way the price and volume are moving and trade in that direction. If traders are pushing a stock higher I want to be long that stock and if traders are pushing a stock lower I want to be short that stock. I really don’t want to be on the wrong side of a trade. That’s detrimental to my financial health.

  I can and have traded successfully throughout my career using only price and volume as indicators. But I’ve done this only when no other indicators were available. Today there are so many additional indicators that I can use to confirm my trading decisions that I rarely trade using only these two things - price and volume. Today I use momentum indicators and oscillators to confirm my trading decisions. I have my favorites and they’re wonderful tools to increase my probability of success and I’ll explain the ones I use in a future post. 


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Go Short to Go Long

8/22/2013

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  Sometimes, when there’s nothing on television, I spend my time looking at lists of stocks to find just that one right stock to add to my collection. I’m looking for the kind of stock that consistently increases its sales, earnings and dividends over time and has an expectation to continue to do so well into the future. You know, that one stock that’s gonna increase 10 fold and let me retire on a big ranch in the beautiful Hill Country of Texas or near a friend of mine in Maui.

  Once I identify that perfect stock, I go to StockCharts.com and study its chart. That website is a wonderful site and should be bookmarked in everyone’s Favorites near the top. What I’m looking for on that chart is the price that would make this stock a real good bargain to buy. A Friday after Thanksgiving kind of bargain. I do that by looking at the moving averages of the stock’s price as well as its associated Bollinger Bands. I most certainly will look at its MACD (moving average convergence/divergence), and I may even look at its P/E (Profit divided by its Earnings) average for historical perspective. I will use whatever means I can to determine the price at which the stock is in essence on sale. When it would historically be considered cheap. And I do mean cheap because I’m cheap. And I’m patient. And you have to be both.

  So let’s say that I find that one stock and it’s currently priced at $50, but based on all of my analysis I have concluded that a good sale price would be $45. What’s an investor to do? The normal investor would put a buy in with his brokerage house for 100 shares at $45 and wait. And wait. And wait. He may or may not end up getting it, depending on whether the stock pulls back to the $45 level. If it does, he bought 100 shares at $45 each for a total of $4500. If it doesn’t pull back then he waited for nothing. Nada. Zilch. That strategy may be good for some, but it’s not good for me.

  What I would do is sell a Put with a strike price of $45 and collect a premium (fee) of, let’s say, $1.25. Since one option is for 100 shares, I would collect $125. Then I too would wait, just like the guy in the last paragraph. If the stock pulls back to the $45 level, I also would buy 100 shares for $4500 but since I get to keep the $125 fee, I’m out only $4375. Nice, huh? If, on the other hand, it doesn’t fall below $45 per share, I get to keep the $125 just for the waiting. Either way, I’m better off financially than the other guy.

  In this example I have literally gone short one Put Option in order to be able to go long the stock. I use this method constantly to get into stocks that I want to own at a price cheaper  than it's currently selling for. But with this strategy you have to have patience. It may take you a while to buy the stock but you’ll earn an income (fee) while you wait. 

  And there’s nothing wrong with making money while you wait!
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Selling Puts for Income

8/21/2013

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  A Put is an option contract giving the buyer the right, but not the obligation, to sell or “put” to the seller a specified amount of an underlying security at a designated price for a specified time. Sounds complicated, right? Well, who said making money was easy?

  Let’s take a moment and try to understand car insurance instead. I have a car and I have insurance. I’m a simple guy and I can understand that. I buy car insurance for a certain period of time and if I have an accident that totals my car, the insurance company buys it. They give me a check and I go buy another car. Simple. I understand that. On the other hand, if I don’t have an accident then the insurance company takes my money, provides nothing for me financially during the insured period, and then tells me at the end of the policy that I need to renew it and pay them again for another term. I understand that too. Now as long as I don’t have an accident, I keep paying my insurance company and get nothing in return except the comfort of knowing I’m in good hands. My insurance agent has a good gig going there and he’s getting fat on my nickel cause I rarely have a claim.

  Now reverse the situation. I want to sell puts. I’m in essence the insurance guy. I’m selling a put option like he sells insurance policies. He’s insuring cars, I’m insuring stock. I guarantee if something happens to the stock someone else buys, I will reimburse them for the loss (it’s what your insurance guys does if you have an accident). For that guarantee the buyer of the put will pay me a fee like we all pay our insurance premiums. If the underlying stock doesn’t fall within a certain time period, I simply pocket the fee and then sell him another put option and pocket that fee too. And now I’m getting fat on someone else’s nickel just like my insurance agent is on mine.

  But, you say, if the stock tanks (like my car’s totaled) I have to buy the stock from the put buyer at the agreed upon price even if the price on the open market is lower. And I say that’s true. I’m buying stock that results in an immediate loss. But there in lies the risk.  Did you think I was gonna take some guys money without any risk at all?

  So what do I do to minimize my risks? First of all I’ll only sell puts on stocks I think are not going to go down and therefore I won’t have to buy the stock and I can keep all those fees to myself. Second I only guarantee a price significantly below the current price so that any initial fall is the risk of the owner of the stock and not me. This is similar to your deduction on your insurance policy. For example, you pay the deductible, or take the first loss, before your insurance policy pays. With these two conditions I reduce the probability of me ever having to buy the stock at a loss. Smart, huh?

  Now the last part of this risk reduction is determining how far below the current price will I  sell a put. To determine that I use a market indicator developed by John Bollinger called Bollinger Bands. They’re a specific indicator that is calculated using basic college level statistics. Unfortunately a discussion of Bollinger Bands is a little complicated and is going to have to be left for a later post.

  Finally, all of the discussion above is predicated upon the idea that I don’t want to end up buying the underlying stock and I only want to collect fees. This is true for this example. But there are other reasons to sell puts, and there are advantages to selling those depending on your investment strategy. Those reasons I will have to leave for another discussion.

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    I am an Individual Investor with specific interest in long term growth and then enhancing my returns with income from dividends and derivatives. I don't recommend stocks to anyone (it's a good way to lose friends) and no one reading this should misinterpret my blog as a recommendation for any type of investment. I am writing this solely for myself and my kids.


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    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013


    ADDITIONAL RESOURCES:
    4 Month INDU Chart
    Dividend Ex-Dates
    Bidness Etc
    SharpCharts Voyeur
    StockCharts.com

    FINVIZ
    Seeking Alpha
    BDC Reporter
    Roadmap2Retire
    DivHut
    Dividend Growth Investor

    Dividend Yield

    Stock Market Mentor
    Chart Swing Trader
    Dividend Announcements
    IBD TV
    Stocks to Watch Today
    Dividend Detective

    DISCLAIMER
     I am not a licensed investment adviser, and I am not providing investment advise for you on this site. Please consult with an investment professional before you invest your money. Any opinion expressed here should not be treated as investment advice. I am not liable for any losses suffered by any party because of data or information published on this blog. Past performance is not a guarantee of future performance. Unless your investments are FDIC insured, they may decline in value.

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