Stock Options Trading Strategies, Blogs on Complex Options Strategies

Friday, February 29, 2008

Arms Index – Stock Trading Indicator

Arms index is a popular stock trading indicator developed by Richard Arms in 1967. It is also known as TRIN (TRading INdex). It can be used for finding both short-term and long-term trends for stocks and also can be used for finding oversold and overbrought conditions. Arms index is a volume based trading indicator, defined by the formula,

Thursday, February 28, 2008

What are Watered Stocks?

Watered stocks are stocks issued by companies having less asset value compared to the value of stocks issued. Watered stock issuing was a common practice around the world in 18th and 19th centuries, but now because of the changes of laws regarding stock issue by corporations this is practiced rarely. Water stock trading involves high amount of risks and often results in huge losses.

Wednesday, February 27, 2008

Mixed Large & Small Cap Stocks Trading

Choosing the right stock to trade is most often the biggest hurdle a stock trader faces. Although trading large cap stocks and small stock caps holds many advantages of their own, it is advised to take a mixed way. Trading both large and small cap stocks offers some more advantages to traders, especially to beginners.

Tuesday, February 26, 2008

Stock Market Trading Newsletter February 25

The Week Ahead: News that the Philly Fed Index reached its lowest level since 2001 indicates that the economy is still sliding lower and increases the chances of the Fed lowering rates again by 50 basis points. Listen to Ben Bernanke's testimony to Congress on Wednesday and Thursday for clues to this possibility. Existing home sales are due on Monday and the PPI on Tuesday. Durable goods numbers and existing home sales are released Wednesday while preliminary 4th quarter GDP is out on Thursday.

Monday, February 25, 2008

Trading Silver Futures

Silver is always considered as a good investment especially to hedge against inflation. Silver is the least expensive among precious metals and thus easy to own. Trading silver commodities can offer you many advantages, but as an experienced trader it is better to trade silver futures and options on them. Trading silver futures gives you many advantages.

Saturday, February 23, 2008

Keep These Simple Trading Tactics

We are sure that, many times you have wondered “How successful traders success from market?” The answer is simple: successful, dedicated and experienced traders reap success from the failures of confused, uncommitted novice traders. Novice traders in any type of market will face extreme challenges from experienced ones and as Darwin’s theory explains “Over production (crowding) leads to natural selection and survival of the fittest.”

Friday, February 22, 2008

What is Dutch Auctions IPO?

Dutch auctions IPO is a newer method of IPO (Initial Public Offer) bidding, which is proposed to offer most price to stock for releasing firms and democracy in IPO bidding. The bidding process of Dutch IPO is just opposite of traditional IPO. In traditional IPO the bidding start from a low fixed price set by firms using data from market researches and evaluators. In Dutch IPO the bidding starts from high fixed/no-fixed price and bidders place bid of low prices.

Thursday, February 21, 2008

Collar Options Trading Strategy

Collar is just one another multi-legged options trading strategy which is practiced when the trader is not so sure about the underlying stock price movement. Collar options trading strategy is a low risk low profit options trading strategy which is followed by traders holding stocks to protect them from falling of the stock price. In collar options trading, the maximum profit and maximum loss are predefined values.

Wednesday, February 20, 2008

Weekly Stock Trader Newsletter, Feb 19

The Week Ahead: News that consumer sentiment is at 16 year lows as we enter this holiday shortened week could weigh on stock prices. Overall profit growth in the 4th quarter declined sharply primarily because of financial companies. Watch housing sector stats with the NAHB housing index on Tuesday and housing starts on Wednesday. Also, the CPI and FOMC Minutes report will be released Wednesday. Finally, an important leading economic indicators number is due on Thursday.

Tuesday, February 19, 2008

Backspread Options Trading Strategy

Backspread or reverse ratio spread options trading strategy is a limited loss unlimited profit multi-leg options trading strategy employed by options traders, when they think the price of underlying stock can raise or fall considerably with time. Backspread options trading strategy is just the reverse of ratio spread options trading strategy. Backspreads are of two types as call backspreads and put backspreads.

Monday, February 18, 2008

What is Risk Aversion?

By simple explanation. Risk Aversion is the inverse of risk tolerance. Risk averse is defined as the behavior of a trader to stay away from risky trading practices, even if those have high chances of profits. Risk averse traders prefer low risk, often low profitable, products to trade. Risk aversion is seen in trading of all products including stocks, bonds, funds, options, futures and currencies.

Saturday, February 16, 2008

Setting Stop-Losses in Trading

Stop loss orders are the most important risk and loss minimizing tool a trader has so far. Stop loss trading strategy is perhaps the most used strategy in trading, but only a few traders know the art of setting them. Once you learn this art you will soon be joined the list of ‘Successful Traders’. Here are some tips for setting stop losses when trading.

Friday, February 15, 2008

LEAPS Options Trading Advantages

LEAPS or Long-term Equity AnticiPation Securities are one of the most traded option types. Although not so popular like short-term options, LEAPS can provide better profit as they are traded for extended periods. Today many experienced option traders use LEAPS options trading as a good alternative of trading stocks and other option types.

Thursday, February 14, 2008

Currency Carry Trades Strategy

Currency carry trades strategy is one of the most used Forex trading strategies, which especially work well when the currencies of the pair stay study. Carry trades are the products of currency rollovers, and are designed for magnify the effect of interest rate difference between currencies.

Wednesday, February 13, 2008

What is Forex Rollover Interest?

In Forex market, most of the trades are done as spot trading, in which the deals are due to settled after 2 days. For overnight holding of positions, the forex broker automatically close all positions at the end of the trading day (10pm – London time and 5pm EST) and simultaneously open new positions. The forex traders will credited of debited an rollover interest rate in his account according to the difference between the inter-bank interest rate of the currencies he trading.

Tuesday, February 12, 2008

Weekly Stock Market Newsletter Feb 12

The Week Ahead: Recession fears continue to grip Wall Street as the DOW had its worst week in almost five years. The service industry reported its worst slump since 2002. Key statistics this week include: business inventories and advanced retail sales numbers on Wednesday, jobless claims on Thursday, with import prices, industrial production, and the University of Michigan Consumer Confidence Survey on Friday. Also of note, Ben Bernanke and Henry Paulson give testimony before the Senate Banking Committee on Thursday.

Monday, February 11, 2008

Goodman’s Swing Count System

Goodman’s swing count system was developed by M. Duane Archer based upon the trading principles of Charls Goodman, one of the most successful traders ever. The trading principles of Goodman were simple but were powerful enough to earn him huge amounts of profits. He was a very conservative trader who does only one or two trades per month; the trades which he figure out has highest chance of profitability and lowest chance of loss. In short Goodman’s believe was that avoiding a losing trade is better than looking for a winning trade.

Saturday, February 9, 2008

Importance of Automatic Trading Systems

We trade in a world of high competition, where everyone wants to outperform us. There for staying on the market necessitates us to adopt competitive strategies and behaviors. If they use advanced trading systems for generating signals and finding opportunities, we need one too of same strength or more powerful. Automatic trading systems are now common for all type of trades and every day a broker come up with a new system or an update of existing system.

Thursday, February 7, 2008

One-Cancels-The-Other (OCO) Orders

One-Cancels-The-Other orders are just another type of orders which traders can use to minimize the effect of market volatility. The practice of OCO orders is much more common in Forex trading compared to stock and futures trading. One-Cancels-The-Other orders, as the name suggests, are combination of two orders, of which execution of one order will trigger the cancellation of other order.

Wednesday, February 6, 2008

Most Important Forex Market Indicators

Unlike stock or commodity markets, the profit and loss of Forex trading largely depends on international matters. A Forex trader should therefore be have knowledge about international matters, what happening within other countries and what happening between countries. Globalization have made things much more complex; you hear a news of policy change by one country whose currency you are not trading, but suddenly will notice that you are profiting or losing with that news, because your country of interest have strong trade relationships with first country.

Tuesday, February 5, 2008

Weekly Market Letter, February 4, 2008

The Week Ahead: Employment growth has turned negative for the first time in 4 years led by housing, manufacturing, and construction jobs. This prompted many to believe more interest rate cuts are coming as stocks posted there best week in nearly 5 years. Look for confirming evidence in the factory orders report on Monday and the ISM non-manufacturing index on Tuesday. Same store sales data, pending home sales, and the jobless claims numbers are due out on Thursday. Friday brings the wholesale trade figures.

Monday, February 4, 2008

Using StochRSI for Trading Equities

StockRSI is the using of Stochastics method for finding the relative value of RSI (Relative Strength Index). It was developed by Tushard Chande and Stanley Kroll, and is best used for finding trading opportunities between over-brought and over-sold positions of RSI. The idea behind StockRSI is simple and has produced some good results. StockRSI for RSI value is defined by the below formula,

Saturday, February 2, 2008

What is Value Averaging Strategy?

Value averaging is one another stock or mutual fund trading strategy which can be used to hedge losses due to market falls. The idea behind value averaging strategy is just like Dollar Cost Averaging (DCA) strategy except an added value factor. Here, unlike buying equities for a fixed amount the investor buys equities for fulfill a targeted portfolio value.

Friday, February 1, 2008

Every Market Holds an Opportunity

Playing with money by putting that on stocks, futures or foreign currencies always include risks and this risk is also responsible for the profit they can offer. A wrong move on a day can evaporate your money and a right move can profit you thousands of dollars. We can successful traders successful because they have held their grounds in periods of wash-offs and energetically reaped successes at every chance they got.

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