Invest and Trade Profitably with Jon Johnson

Education Center

Can you be more specific on when to buy and close positions?

August 30, 2000

Many patterns allow for a set buy target when the stock breaks out. Cup w/handle patterns, wedges, flying plateaus, and the like allow us to set a buy price that is just above the breakout point. That is easy. The hard part is volume. Breakouts on low volume usually fail. That is why we know […]

Why do you write credit put spreads versus just selling the puts on a stock as writing a spread only reduced the premium you take in?

August 30, 2000

Credit spreads are the only way some investors can take advantage of selling puts. Many brokers will not allow less experienced investors to sell puts sell puts; they feel it is too risky as the stock could theoretically drop to $0, and you would have to take the stock at the strike price you sold. […]

How do you calculate volume intra-day?

August 30, 2000

For example, we want to buy a stock if volume picks up to the two million range. Problem is, you don’t know what the real volume will be until the end of the session. By the time you know the volume, the stock has run $5. We handle this dilemma by knowing the stock’s average […]

When placing an order for options or stock, should it be a day order or a good til cancelled?

August 30, 2000

When entering a position, we usually use day orders. We are trying to enter at a specific event, and a good til cancelled (GTC) will trigger whenever the stock hits that point. On breakout plays, that can work well. But let’s say your stock is starting to make the move, but you are trying to […]

Playing A Falling Market.

August 30, 2000

Today we talk about finding and playing another type of stocks in a falling market other than those that have spiked up in price. Actually, these plays are around whether the market is rising or falling. Indeed, over the past three years many bears have lamented that the gains in the averages were shared only […]

Buying and Selling Options: You see the breakout, or you see a pre-split stock start to move up. You place your order to buy options, you receive confirmation you were hit, and things look good. Then, bad news hits the market, and stocks drop. Not a huge selloff, but the rally softens. Your options that cost you $12 a pop go from being up a point or two to being down $2 in an hour. What do you do?

August 30, 2000

That question is impossible to answer in a general discussion. There are too many variables that impact any particular option, including news on the underlying stock, volatility of the underlying stock, market conditions, etc. There are, however, some rules that you have to set yourself on any option trade. Options are a wasting asset, and […]

What is the Phillips Curve?

August 30, 2000

The Phillips Curve is a graphic representation of the economic relationship between the rate of unemployment (or the rate of change of unemployment) and the rate of change of money wages. Simply put, the Phillips Curve stands for the proposition that when economic activity booms and unemployment falls below its natural rate, we have inflation. […]

What are candlestick charts and dojis?

August 30, 2000

Candlestick charting is a Japanese form of charting that we feel gives us more information in a glance than other chart styles. We feel it is a very accurate measure of a stock’s momentum, especially when used in conjunction with price and volume. We especially like it with respect to helping determine when a stock […]

After the turn down, what do you sell?

August 30, 2000

We prefer to sell at the money calls, usually in the current month of expiration. That way you get the best movement in the option price as the stock falls in price as at the money calls close to expiration are the most volatile. We can sell out of the money calls, but it takes […]

This part covers selling covered calls on long-term stock holdings.

August 30, 2000

For our retirements, we buy great stocks when they are beaten down. Technology stocks sell down about twice a year, making them good buys. Other sectors have there down times as well. Those are the times to make your major buys, but they also offer great opportunities on breakouts all during the year as they […]

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