One of Johnny Carson’s best characters was Carnac the Magnificent. Clad in a cape and giant feathered turban, the comic great pretended to prophesy the answers to secret questions.  The act went something like this: Carson holds an envelope to his head, pretends to concentrate, and then sternly says, “Sis boom bah.” Then he opens the envelope and reads the question that prompted the answer: “What sound does a sheep make when it explodes?” If only it were this hilarious and easy to predict the future values of investments.  That’s why people use options. Predict the future price of a… Read More

One of Johnny Carson’s best characters was Carnac the Magnificent. Clad in a cape and giant feathered turban, the comic great pretended to prophesy the answers to secret questions.  The act went something like this: Carson holds an envelope to his head, pretends to concentrate, and then sternly says, “Sis boom bah.” Then he opens the envelope and reads the question that prompted the answer: “What sound does a sheep make when it explodes?” If only it were this hilarious and easy to predict the future values of investments.  That’s why people use options. Predict the future price of a security accurately, and you’ll make far more money than just holding the security. Blow it, and you can at least limit your downside.  It sounds easy, but before you put on your own feathered turban, here are a few things you need to know about options. 1. What Are Call Options And Puts — And How Do They Work? The most popular forms of options are puts and calls. A call gives the holder the right, but not the obligation, to purchase 100 shares of a particular underlying security (usually a stock) from the seller at a specified strike… Read More

While equities have risen to multi-year highs, many commodities and natural resources companies have largely been left in the dust. But the best time to buy something is often when it is out of favor and not in demand… yet. One… Read More

One way to participate in the resurgence of the China bull trend is through the iShares FTSE China 25 Index Fund (NYSE: FXI). This exchange-traded… Read More

Groupon (Nasdaq: GRPN) has been hit hard during the past year, but a price bottom may have formed with extreme lows below $3 a share. As of this writing, Groupon is trading around $5.36 a share. The unfilled gap down in August from $6.35 to the… Read More

Groupon (Nasdaq: GRPN) has been hit hard during the past year, but a price bottom may have formed with extreme lows below $3 a share. As of this writing, Groupon is trading around $5.36 a share. The unfilled gap down in August from $6.35 to the 52-week low at $2.60 has midpoint support at about $4.50 to lean on. “Cheap” is a relative term, but with the downside risk of zero and unlimited upside potential, I’d say Groupon… Read More

Groupon (Nasdaq: GRPN) has been hit hard during the past year, but a price bottom may have formed with extreme lows below $3 a share. As of this writing, Groupon is trading around $5.36 a share. The unfilled gap down in August from $6.35 to the 52-week low at $2.60 has midpoint support at about $4.50 to lean on. “Cheap” is a relative term, but with the downside risk of zero and unlimited upside potential, I’d say Groupon stock qualifies. Due to volatility, another word for opportunity, the options on the stock offer many strategies with mathematical advantages over a straight purchase of the shares. If you are comfortable holding on to this inexpensive stock to wait for a potential recovery, then selling put options could allow you to collect income while you wait to get into the stock at a 16% discount. Cash-Secured Put Selling Strategy While the typical investor might use… Read More

For many years, traders have been looking for the next Microsoft (Nasdaq: MSFT) or the next Wal-Mart (NYSE: WMT). They want to find a small company that is about to become a market leader and the dominant force in its field. Finding winners that… Read More

For many years, traders have been looking for the next Microsoft (Nasdaq: MSFT) or the next Wal-Mart (NYSE: WMT). They want to find a small company that is about to become a market leader and the dominant force in its field. Finding winners that… Read More

The concern over sequestration by the federal government has pressured defense stocks in the past month. But the United States is the biggest military spender in the world, spending more each year than the other top five countries combined. This tells me there is… Read More

Option trades, like any other market trade, involve a buyer and seller in order to complete the transaction. The buyer of a call option has the right to buy the underlying… Read More

There are two sides to every options trade since there is always a buyer and a seller in every market transaction. On options trades, the seller is said to be writing an option, and from the writer’s… Read More