Depending upon the kind of market we are in, our strategies can shift to accommodate any changes in movements that stocks tend to have. For example, if our usual strategy with options in a steady market is to let the play run until our stated target is hit and then take money off the table, […]
An option delta measures approximately the change in the option pricefor every $1 change in the underlying stock price. For example, if a calloption has a delta of 50 (it can also be shown as 0.50), for every $1 theunderlying stock moves up or down, the option will move, all other thingsequal, 50 cents. A […]
Trading before and after the open and close has improved with moreefficient trading systems and better liquidity. Anything to help match uporders helps, and with more individuals participating it has helpedliquidity. One of the problems with trading outside ‘normal’ hours isthat there is no market maker; orders have to be matched based on size andprice. […]
That depends upon each situation. We like to buy stock in our IRA’s and other retirement accounts; options in our trading accounts but we also buy some stock there. It is a personal decision based upon the investor’s goals, amount of money to invest, etc.
We teach in the seminars (and we repeat here from time to time) something of the same thing but slightly different. We say that 75% of the stocks follow the overall market. This makes sense when you think about it. Stock prices are driven by earnings and when earnings are expanding overall, stocks rise overall. […]
Stocks repeat patterns again and again though many refuse to believe they are caused by the same factors. One of the strongest influences on the market is emotion, either greed or fear, and stocks and the indexes set up patterns that show this greed and fear year after year, decade after decade. Many people think […]
Moving average crossovers are a technical analysis tool that can be useful in predicting advances or declines in the movement of a stock or index. A crossover simply describes the movement of one moving average crossing over a second, with one being shorter (faster) or longer (slower) than the other. Crossovers can give buy or […]
The target volume for any play on the reports is typically going to be a lot higher than the average daily volume, because it’s that huge demand in buying that is what will push the price past resistance, giving it that explosive move that starts the next run. We want to see lots of buyers […]
ECRI is the acronym for Economic Cycle Research Institute. It is a private entity that studies various aspects of the US and other world economies such as acceleration and deceleration and inflation prospects. The Conference Board puts out the LEI (Leading Economic Indicators) made up of a basket of 10 indicators. ECRI looks at several […]
We will hold stocks as long as they are making money or are continuing the pattern/move that made us inclined to buy into it. Even for solid, well-performing stocks, the market can throw you a fast one when you least expect it, so our basic rule is that if the stock fails to make or […]
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