There’s an option trading strategy that’s practically a hidden reservoir of monthly income generation lying in your own investment portfolio’s proverbial ‘backyard.’ Becoming aware of this strategy and learning how to use it empowers you to start generating real income from your portfolio, quickly. While you may not have known about this great opportunity to put your portfolio to work, increasing …
How the Stock Market Works Part I: Exchanges
The Snider Investment Method utilizes purchasing stocks and selling options like many other investment strategies. The moment an investor buys shares at market price, like magic, the shares usually appear in the account almost instantaneously. Many people accept the magic behind the process and move on. However, behind the scenes there is a lot more going on than a sprinkle of magic dust and whispers of abracadabra. There are many parts on the back end, from the exchanges, brokers, specialists, and market makers. This article will focus on the exchanges.
Dividends and Why Option Contracts are Adjusted?
When a company declares a special cash dividend, optionsXpress sends emails to investors holding that particular stock saying “underlying option strikes have been reduced accordingly and all open equity and option orders have been cancelled.” These emails cause a fair amount of confusion. I receive many phone calls asking about the situation and what they should do. In order to know what action to take, we must first understand what this message means.
Understanding the Rights of Option Buyers
Options are the bread and butter of the Snider Method. If you are a Snider Method Alumni, you most likely have a solid understanding of the reasoning why we sell options, but you are probably less familiar with the strategy of those who buy options. Recently, I have received more questions than normal about the rights of those who buy options and how they work. I will address a few of the most frequently asked questions.
What is a Covered Call? Learn the Pros and Cons
Before diving into the complexities of a covered call trade and how it can be used to generate portfolio income lets first define what an option contract is and what it means to each party involved. There are two main types of options, call options and put options. A call option is a contract that gives the holder (buyer) the right, but not the obligation, to buy a security at a specified price for a certain period of time.
Option Premiums Part IV: Interest Rates
In the Snider Investment Method, we sell options for a premium, which is the amount we receive for selling someone the right to purchase our shares at a particular price over a given period of time. This is the final part of the series, with each article explaining a different component that helps determine the premium of a stock option. The last article discussed stock price and how price movements cause premiums to increase or decrease. This final piece will focus on interest rates and its effect on option premiums.
Myths and Misconceptions about Exchange Traded Options
There are a variety of long-standing myths about options that need to be dispelled. The most widely held are: 1) options are too risky; 2) they’re too complicated or you’re not smart enough to use them; 3) you cannot use options inside of an IRA account; and 4) options on General Electric, for example, are no different than the exotic, …
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Master the fundamentals of equity options for portfolio income.
Climbing to Profits with an Options Ladder
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Stock Selection 101
A Smart Investor’s Guide to Success
Simple Strategies to Help You Rationally Evaluate Your Next Stock Purchase
Managing Investor Emotions
WHY YOU ARE YOUR OWN WORST ENEMY OF INVESTMENT SUCCESS
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