Options Trading Mastery: Behavior of the Time Spread

Time spreads can be a profitable investment strategy if you understand the concept of time decay. A time spread is designed to take advantage of the fact that an options decay curve is non-linear, that is, an option's value does not decay evenly over time. As an option gets closer to expiration, its rate of decay increases meaning the option loses value more quickly. That decay rate increases progressively until expiration. An option's decay rate begins to accelerate when the option is about 45 days out. It picks up steam at 30 days out and really comes under decay pressure at about 15 days out. This scenario is similar to a boulder rolling down from a hilltop.

Penny Stocks are Hot! Beware

Penny stocks are no joke if you are looking for a way to make money and make it fast. I suppose you have pondered the idea of investing in these a time or two or perhaps you have heard of them but really did not know what they were. Well here is the secret, penny stocks can bring in the big bucks BUT you can also lose your shirt if you do not know what you are doing. Settle down and does some research before you get too excited. Take it from someone who has gotten burned more than a couple times that you need to understand what you are getting into before jumping in blindly. So what is a penny stock exactly? Well, officially it is any stock with shares currently priced under $5.

Options Trading Mastery: Construction of the Time Spread

Time spreads, also known as calendar spreads, are an ideal way to take advantage of time decay and changes in implied volatility. Time spread strategy focuses on the movement of time and volatility more than on the movement of the stock. Therefore, it is perfect for when you anticipate stagnant or explosive periods in a stock. Time spreads, like other spreads, have their own risks and rewards. The risks are very limited for the buyer, but substantial for the seller. The seller's risk can be avoided or contained with due diligence at the expiration of the near month's option. Several strategies can affect the seller's risk. The advantage of the time spread strategy is that the investor can pursue a time decay or volatility position without the large capital outlay necessary for the purchase of the stock.

 

Surviving A Recession

When the major stock market averages declined by 10% from their 2007 highs on Monday, we were in official market correction. Sentiment is negative owing to the economic back drop of, at best, tepid growth according to the Fed, or a recession. Consumers twenty-five credit binge fueled by home equity loans, credit cards arriving in the mail, sub prime and adjustable rate mortgages and automobile leases, appears to be over. Savings rates has plummeted from 14% to 0% (perhaps to a negative number if home values continue to decline). Pile on top of that the banks debt problems, high energy prices, the homebuilding industry's woes, weak retail sales and declining consumer sentiment, it's no wonder that many investors believe a recession is in the offing.

New Luxurious Dubai Property Projects

International real estate investors interested in getting in on â the next big thingâ are turning their attention towards Dubai property for sale. From a property investorâ s perspective Dubai offers investors the chance to tap into incredible returns on investment throughout the build period and beyond, together with the chance to generate some of the most attractive, sustainable and increasing rental yields in Dubai from the growing numbers of tourists expected to flock to the delights of Dubai. Jumeirah Beach Residence in Dubai is considered the largest single-phase residential and commercial project in the world, at a cost of AED 6 billion (US$ 1.6 billion).

The Tax Gifts Keep On Coming

Did you know that you can sell a stock at a profit and pay next to nothing in capital gains tax? Or that you may not owe any tax on dividends you receive? It's true. The Tax Increase Prevention and Reconciliation Act (TIPRA), which was signed into law in early 2006, reduces capital gains and dividend tax rates even further down to 0% in some cases. Read on to find out more and how you can save money through proper planning. Capital gains tax must be paid when you sell an asset for a profit. For instance, if you buy a stock at $10 per share and sell it two years later for $15 per share, there is a $5 per share gain that is subject to tax. Most of us know that the maximum capital gains tax rate is 15%.

Avoid Market Timing By Using DCA And DVA

Ideally, investors try to buy a stock when the price has reached a support level (a level at which the price is as low as it will go) and sell the stock when it hits a resistance level (a level at which the price is as high as it will go). This is easier said than done. Most investors end up missing out on a continual rise by waiting for a stock to plummet first, or sell way to early by underestimating how high the price will go. In this article, we will focus on the two most popular strategies that you can use to invest without having to worry about market timing. Dollar cost averaging (DCA) is an investing technique intended to reduce exposure to risk associated with making a single large purchase.

 

Tips for Buying Mutual Funds

The most important thing you will need to decide before purchasing shares in a mutual fund is, of course, how much you wish to invest. Now, if you're just getting started in investing, you may not have a lot to invest. If this is the case, you may need to invest all of your money into one mutual fund to begin with. If you have more money to work with, or you are more experienced, you may want to spread your money out over a couple of funds. You might even choose to put a portion of your money into mutual funds, and the rest into riskier investments that may provide a stronger growth opportunity. Your first option for investing in a mutual fund is to do so through a brokerage firm.

Options Trading Mastery: Getting Out or Rolling the Position

The selection and management of a vertical spread are only two-thirds of the game. Closing out, rolling or morphing the position has to be analyzed and executed with the same due diligence as was used in the selection and management processes. Looking at the closing out of a vertical call spread, we find there are three possible outcomes that must be addressed. The spread can finish out-of-the-money and valueless. For a call spread, this scenario occurs when the stock closes at or below the lower strike of the spread. In this scenario, in order to close out the spread, one would just let it expire. Both options finish out of the money so no residual position will be left over.

Bracketed Orders in Stock Trading

If you are planning to buy stocks as a long term investment you might want to consider placing a bracketed order on it. A bracketed order goes one step further than a trailing stop order. Remembering that a trailing stop order, you are in control of your investments because you are able to limit the amount of your losses by setting stop price. With a bracketed order, you are able to not only set a limit on your losses, but you are able to set a limit on your profit, that when reached, your stock will be sold. This type of order is best illustrated with an example. Your broker places a bracketed order for 100 shares from Linens-n-Things, a department store, priced at $50 per stock, placing a sell limit order at $100 and a sell stop order at $45.