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Put

How to Buy stocks using Options (Short Put)If an investor wants to buy stocks, a better way to do it is Selling Put options. What are Put options? A put option is an option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price (called Strike Price) within a specified time (called Time to Expiration). This is the opposite of a call option, which gives the holder the right to buy shares. The investor can either buy or sell options. We will focus on selling options in this example. Selling a Put option will obligate the investor to buy the stocks at the strike price if by expiration the current price of the stock is lower than the strike price. In this example, the investor is bullish on the stock and already wants to buy them, but would prefer to buy them at a better price. If that's the case he can sell put options and receive a premium, until he gets assigned. Example: Let's say TraderX would like to buy 100 stocks of AXP (American Express), right now is trading at $100.96. TraderX thinks that the $96.5 level which is the monthly S1 Pivot would be a good resistance point and would like to get long if the stocks retrace back to that price. TraderX can sell 1 Put option (1 option contract = 100 shares) with a strike price at 96.50 with 47 days to expire for a credit of $1.05. If the Stock doesn't go back down during the next 47 days (Days to Expiration), TraderX keeps the $1.05 premium and makes $105.00 ($1.05 x 100). If it goes down below 96.50, the option is In The Money (ITM) and will get assigned at expiration. However, TraderX will keep the $1.05 credit regardless making his effective price or cost basis $95.45. By using Options, the investor will get the following benefits: 1. Making profits, even if the stock never gets to his price. 2. Buying low, relative to the price where the stock currently is. 3. Improve his probabilities of profit. Since the investor is receiving a credit, the trade is no longer a 50/50 shot (In essence he get's a headstart). 4. Reduce his cost basis, since he keeps the Credit received (In this example $1.05, which is over 1% lower from his original price). 5. If the option expires, the Investor can just keep selling options and getting paid until he gets assigned, or no longer wants to be bullish on the underline.
NYSE:AXP
by AlexanderGotay
10
MRO Short Term BearishOn November 07, 2017 MRO had a high wick reach $16.59 before closing down for the day. I believe this to be a good resistance line for now due to that same price range (give or take a few pennies) acting as Resistance in April 2017, March 2017, February 2017, November 2016, September 2016, August 2016, and September 2015; as well as acting as Support briefly in October and November 2015. Even though the past couple of days (November 09-10, 2017) have seen green candlesticks , they have been moving down in price. I purchased a December Put, Strike 17, on 11-09-17 for $1.65 (the spread at the time of purchase was $1.62-$1.65). The Stock price at time of purchase was $15.70. $14.12-$14.16 has been a general line of Support in August 2015, Resistance in December 2015, Support again in September through November 2016, Support in March and May 2017, and then acting as Resistance for a couple weeks in October 2017. Due to that activity I believe it possible for MRO to retrace to that area again; and because of that I have targeted that area as my sell point. I expect it to take no longer than three weeks to reach that area of Support. If you draw lines of Support at $14.12/$14.16 and Resistance at $16.60ish I can see a channel/rolling pattern from August to November 2016 and briefly from March to April 2017. If MRO does hit my estimated Support I will wait a few days to see if once again it rises in price to repeat that pattern and becomes ripe for a "double dip," or the opportunity to enter a Bullish/Call play almost immediately after exiting a Bearish/Put play.
MShort
by AROD01
1
Why selling OTM spreads is guaranteed to wipe out your profitsTrading without a risk management is gambling. Gambling relies on hope. Selling OTM spreads depends on a 75% success rate and surviving a few big losses. The RR is very low if you are aiming to collect 25% of the spread. I traded 12 months solely on BullPut and this has taught me well. It's a losing strategy based on the misconception of high win rate and "consistent" income. Using ITM spreads, you can enjoy higher RR and live to make another trade. I took a calculated loss on AAPL with RR 1.6.
NASDAQ:AAPLLong
by tlcgharvest