Options Trading

TradeKing potentially makes trading easier for the advanced option trader with an upgrade to the contingent order feature. TK's Brian Overby describes how to use this new contingent order feature to place a "stop loss" order on a bull call spread.

If anyone has seen my email signoff or letter closing, I substitute “Sincerely yours” with “Be Good”. Be Good is one of our main tenets here at TradeKing. If you are good to people, you can’t go wrong. This is what brings me to today’s topic. As part of TradeKing’s new volunteer program, where we focus our efforts on programs in our communities aimed at improving financial literacy, a few of our TradeKingers practiced being good to some motivated youngsters recently at a Junior Achievement “Biztown” event in Charlotte, NC.

Fra-gee-lay– Must be from Italy   I’m not abig fan of forwarded emails or “send this to 7 people or else…” messages, but Idid get one recently that made me think a bit. As we approach Thanksgiving andthe full on Christmas (and Hanukkah, …and other holidays) season, I wanted toshare this with you. 

It’s infographic time!  We’ve been hearing about the 1% of peopleand/or corporations not paying their fair share a lot in the news lately. Onething that surprised me as I absorbed the data from this graphic was just whois paying the overwhelming share of taxes in America. Wasn’t it just a fewyears ago we had congress calling for new taxes on “windfall profits” the oilcompanies were making from high gas prices? Did anyone else know the Big 3 OilCompanies in America have 40-45% tax rates? Check out the contrast to GE andAT&T. GE has a tax rate of 7.4%! Is that paying their fair share? Whatabout AT&T? Does anyone know why they get back over a billion dollars intax rebates? 

Whilein Chicago last week, I stopped in to have some fun with the group at tastytrade.For those of you who have not had the pleasure of catching a segment on www.tastytrade.com, theyoffer live online programming about the financial markets. As in ALL financialmarkets, traditional and non-traditional alike. To use their words, “GetTasted,” is alternativefinancial programming where Wall Street squawk meets improv talk.The hosts discuss anything and everything financial from stocks to sports,aiming to deliver a “Daily Show” about the markets.  

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Mark Wolfinger fields a question about options exercisevs. other ways to exit a trade

Alan Brochstein finds 6 stocksthat might appeal to conservative investors

optionsguy

Alan Brochstein Discusses Investigating Large-Cap Technology Stocks 

AlanBrochstein Screens for Potential Growth Stocks

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Mark Wolfinger fields a question from an SPX trader in the TradeKing forums

Alan Brochstein suggests investigating large-cap technology stocks down sharply in 2011 Technology stocks, like the rest of the market, are having a lackluster year, essentially unchanged in price in aggregate as measured by the S&P 500 members. Within that group, performance has been quite varied, with 7 of the 75 stocks up more than 20% but 15 of the 75 stocks down by more than 20%. In order to find some potential opportunities among these beaten-up large-cap tech companies, I created a screen to help separate companies with bigger challenges from those that might be able to snap back. Here are the parameters I employed: These two simple requirements - essentially that the company is growing and is expected to continue to grow - knocked out almost half the names, leaving eight to examine more closely. Here they are, sorted by YTD return: [click on the image above to enlarge it] As always, please remember: this screen is just an illustration for identifying stocks to research further. You should do a thorough investigation of any stock before investing.

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Dan Passarelli considers how an old Chinese saying relates to the current turbulent market

Alan Brochstein screens for stocks with price and earnings momentum

Mark Wolfinger adds his two cents to Brian Overby's counsel in a recent Options Guy post I wanted to chime in a few additional thoughts on Brian Overby's post A Short Put Spread That's Soured On You. What Can You Do? As Brian observes, this is a bad situation for this trader - but hopefully a teachable moment that'll save him future losses like this by replicating the mistake. Below is the original question, so you can get the context. I'd also definitely recommend reading Brian's blog post in response: Hi Brian: I have a trade for which I would like to get your advice. I sold an AA Oct 16-15 put spread for around 55 cents credit. Now AA is trading at 11.21 and that spread ask price is 1.05 with mid around 95 cents. Should I sell one more lot just in case if AA rallies to 12.5 and I can get out of it, or should I roll over to Jan? Waiting for your suggestions...

Dan Passarelli talks moneyness and its usefulness to the options trader Moneyness isn’t a word, is it? It won’t be found on spell-check, but moneyness is a very important term when it comes to options. There are three degrees, if you will, of moneyness for an option: at-the-money (ATM), in-the-money (ITM) and out-of-the-money (OTM). Let’s take a look at each of these terms, using theoretical stock XYZ as an example. Imagine XYZ is trading around the $320 level, so let’s define the moneyness of XYZ options relative to their $320 price.

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