SECRET OF OPTIONS

This is my favorite investment. Options market was very famous among investor. What is Options ? Options are a contract that gives the right to buy (call options) or sell (put options) amount of assets on agreement prices in period of time. Options can be leverage for your investment, it’s better than buying shares from Stock Exchange but with the same profit. Can you imagine? Options can be use as insurance for your investment in stock.

If you asked me, what is the best options broker? Well, it’s depends. Every broker has their own advantage and disadvantage. I recommended 2 brokers that have good reputation. Interactivebrokers.com and Optionsxpress.com. If you don’t want to lose your money because you don’t trade for a month or great graphic chart or great screener, you should choose optionsxpress. But if you want faster trading platform and lowest fee, you should choose interactivebrokers.

After you choose your broker, now the biggest question is how to win the market. In every investment rule, you should remember money management and don’t forget to setup your mental. If you want to know how to change or setup your mental, just click here.

Usually, every trade in options takes USD 300 – 600 / contract depends on what shares do you pick. So you have to prepare around USD 5000 – 10.000 in your account. Not like FOREX. You can trade just USD 5 or even for free in Marketiva.com. But you can get profit 8000% in just 3 days.

You can select the company that you want to buy the shares using yahoo screener. Just click finance.yahoo.com and find screener. I won’t tell you much about this, because it takes one book to explain all about options. You can find a lot of tutorial about options in internet but if you want to ask me just email me or chat with me. I’ll be glad to tell you.

I just want to tell you the secret of options. There are 8 secret in options :

1. Upgrade and Downgrade.

If Upgrade, buy call strategy, because it has high probably that the shares going up in short time.

If Downgrade, buy put strategy, because it opposites upgrade.

How to look the shares that upgrade and downgrade :

Yahoo finance > Stock Search > Analyst Research > Up/Downgrade.

2. Stock Split.

If stock split, you can buy call, protective put or bullish strategy. Because it has high probability that the prices could go up / back to original prices.

How to look the shares that doing stock split :

Yahoo finance > Stock Research > Financial Calendar > Stock Splits

3. Channel Trading.

You use stochastic technical analysis indicator for channeling shares.

If top of the channel or downtrend : you can use buy put, put debit strategy, call credit spread or bearish strategy. If it break out resistance than cut loss, change your position, or straddle / strangle, or ratio spread.

If bottom of the channel or uptrend : you can use the opposite strategy.

4. Gap Up and Gap Down.

If it’s Gap Up than buy call options. And if it’s Gap Down than buy put options. If gap already happens and if downtrend than you use but put, call credit spread or bearish strategy.

5. Earning Analysis.

Before gap happen you can use buy put or buy call or straddle/strangle strategy. Check shares historical that always had gap before earnings.

Buy options 1 month less. The right times were when earning release / quarter or FDA approval or others conditions like court trial etc.

How to look Earning Calendar :

Yahoo Finance > Stock Search > Company Earnings > Earnings Date.

6. Earning Surprise.

If Surprise > +100% than buy call, if Surprise < -100% than buy put.

How to look Earning Suprises :

Yahoo finance > Stock Research > Company Earnings > Surprises

7. Earning Revision.

Earning revision > 50% than buy call, if earning revision <>

You can go to news like yahoo, marketwatch or Bloomberg etc to know about earning revision.

8. Insider buying or selling (Institutional).

Check the news, check the schedule in Yahoo Finance > Ownership > Insider

If it’s insider buying than use bullish strategy. and if it’s insider selling than use bearish strategy.

To buy options, you have to know the volatility. Because it tells you that if the options was cheap or expensive. By comparing Historical Volatility (HV) with Implied Volatility (IV), we can tell whether it’s cheap or expensive. HV > IV = cheap and HV < iv ="">

There are a lot of advance strategies in Options that I could not explain in here, because it took a lot of pages. If you want to know more about it or discuss about this matters, just email me or chat with me. YM ID : Endraz2008.