This profit and income strategies index presents an ongoing listing of all investing strategies from fullyinformed.com. This index is updated with each release of additional profit and income strategy articles.
Over the past 40 years of investing I have used and profited from all these profit and income strategies at various times and on a wide variety of stocks and ETFs.
Within this index are subindexes of other profit and income strategies which due to the number of strategies within some subindexes are better served by having their own index pages.
Consider subscribing either via email or through the RSS feed (link to the far right of your screen) to stay up to date with each new profit and income strategy article release.
My favorite profit and income strategy is Put Selling. Many investors refer to this as writing puts, or selling naked puts or cash secured puts. Whatever the descriptive title used, put selling has been the cornerstone of my profit and income strategies for decades.
There are too many Put Selling articles to include on this Profit And Income Strategies Index page. I have created a separate index for Put Selling articles. Select this Put Selling link to view the PUT SELLING index page or select this put selling link to browse the various put selling articles directly.
Many investors fail to understand the value of developing profit and income generating covered call strategies. In many ways covered calls are like renting out your stock for short to long periods of time. Over the years I have developed many covered calls strategies that not only have generated coumpounding profit and income returns, but have succeeded in not having my underlying stock shares exercised away from me.
There are literally dozens of covered calls strategies that investors have developed and applied. While many analysts look upon covered calls as giving up a rise in stock valuation in return for small gains of covered call premiums, this is far from true. I have used covered calls strategies to compound returns over a period of years and gained on the capital appreciation in the underlying stock at the same time.
Most analysts who comment negatively about covered calls have not taken the time to study the strategies available that provide profit and income and can assist in protecting against a partial decline in the underlying security.
There are many Covered Calls articles and as such they have their own index page, which you can reach by selecting this covered calls link. You can also browse all the Covered Calls articles directly through this link.
PROFIT AND INCOME STRATEGIES:
This section discusses a wide variety of investing articles designed to generate profit and income in different stock market conditions and within an assortment of investment assets. To read an article select the article title.
The Shark option trading strategy relies on the Fast Stochastic and Moving Averages combination of technical tools to pin point when to buy and sell both puts and calls. There are two versions of this strategy included in the article. The first looks at the Original The Shark strategy and the second studies The Shark Strategy with the adjustments I have made to it over the years in an endeavor to gain larger returns that the original. This strategy is a “for purchase” only article.
The Shark Option Trading Strategy does not listen to news events, worry about analysts recommendations or care about overall stock market direction. The Shark follows the price action in the underlying security to determine proper periods to buy calls or puts depending on the shares price action and when to sell them. The Shark Strategy enjoys larger returns with higher volatility and loves the whipsaw of Ultra ETFs. While designed for Ultra type ETFs this strategy can be used on other stocks and included is an example of Amazon Stock and Bank of Nova Scotia stock. There are distinct advantages to The Shark strategy including:
- Small amounts of capital required for The Shark Option Trading Strategy.
- No need to commit capital to stock shares.
- No need for large capital positions in the underlying security.
- Rarely get caught at the top of a rally and rarely caught in a plunge.
- No concern as to what direction the security is headed.
- Rarely miss a rally or a tumble in the stock.
- Often capital is not in the market while waiting for the next signal to invest again.
I have used the Shark Option Trading Strategy on a variety of stocks before turning to Ultra ETFs. Most of the time I use it only on Ultra ETFs because the volatility provides excellent option premiums, however throughout the year I find myself applying this strategy to stocks that fall within the guidelines of the Fast Stochastic. Once in a while a quick trade such as recently in Amazon stock and also in PepsiCo Stock can reap excellent returns for a few days of work. The Shark is an option trading strategy well worth learning even if an investor only used it once or twice a year. This article is for purchase only.
We have all been Cry Babies at one time or another. We have bought stock only to watch it plummet and then ended up saying “if I had more capital I would buy more right now!”. When a baby cries, parents often use a soother to calm the baby down. In this strategy Free Money is the soother. The Cry baby strategy shows how to find additional capital through selling covered calls that can be used to earn capital while waiting for the underlying security to recover. It shows how the Cry Baby strategy is used to continually benefit the investor and set up a strategy that can generate additional income, compound that income and keep some shares uncovered to take advantage of possible rises in the share value. There are a number of examples including a Bank of America stock example from the crash of 2008 where an investor down almost 90% in stock valuation used the Cry Baby strategy to end up with a 67.4% total return in 13 months. It is quite the strategy and among my favorites to employ. This article is for purchase only.
This strategy is for day trading within the IWM ETF following momentum within the stock, up or down. Trades are done daily primarily in the morning and late afternoon. The strategy uses 3 technical indicators to follow momentum within the IWM ETF (Russell 2000 small cap stocks ETF). This strategy was paper traded for several months and finally implemented to compliment the SPY PUT Hedge strategy to allow my portfolio to benefit from price movements up as well as down in the IWM ETF. The strategy requires very little capital and returns have been quite good. This strategy is in the members only section. The members section discusses this trade in detail, presents how to implement the strategy and shows the ongoing trades within the IWM ETF that are done daily.
LEARN FROM THE BEAR – Series of 3 Articles:
Stocks studied are: (select a stock to read the respective Learn From The Bear article)
This is a series of 3 articles which looks at stocks and the story behind their respective charts. By following chart patterns and studying charts in bear markets, investors can learn what strikes to consider selling puts against and what price to consider buying stocks at. Bear markets are scary but instead of fearing them investors need to learn to embrace the bear. By reading these articles, investors can understand and learn an easy method for applying simple chart patterns to pick strike levels and calculate whether or not a stock is worth buying during a bear market, a correction or even a stock market collapse. Investors learn that there is nothing to fear in a bear market except missing some great profit making potentials.
In this article I reply to a reader about how to use options for superior returns while protecting against losses in a bear market.
This article looks at what is a collar option or married put and how should it be applied to be consistently profitable while at the same time affording adequate protection.
In a bear market investors look to still profit but protect their stock positions from possible downside damage. This article looks at the collar strategy and discusses the pros of using the collar strategy and the cons. It then goes on to study different methods to apply the collar strategy using a real example with Apple Stock.
This article looks at the collar strategy I have used for more than two decades to earn a dividend and reduce my cost basis until it is zero in a stock. When I put in place a collar strategy my goal is to have protection for a cheaply as possible and have my original capital returned to me as fast as possible so I can put it back to use building another dividend position. This is how I built my dividend portfolio of stocks.
This Members Only article shows how by setting up the Ultimate Oscillator and Relative Strength Index (RSI) properly, any investor can achieve profits while also being aware of risk to their capital.
This Members Only article presents the Bollinger Bands Strategy Trade which I have used since the introduction of the Bollinger Bands from John Bollinger. This strategy uses the Bollinger Bands to time getting and out of trades for boosting profits from complimentary Put Selling trades.
This article discusses two important indicators to be watching when deciding on the entry point for the Bollinger Bands Strategy Trade. This assists in avoiding entering at the wrong time. using these two indicators properly will assist in maximizing return and help to avoid losses.
This PDF strategy article is 31 pages in length and studies a Covered Calls Strategy designed for investors who have long-term stock or ETF holdings in their portfolio and wish to sell covered calls against those holdings for profit, income and protection against corrections and bear markets. The strategy paper shows the kinds of results that can be achieved and how to rescue covered calls that are caught deep in the money when a stock rallies leaving the investor facing the possibility of losing his shares through exercise of his sold calls. Emphasis in the strategy paper includes how to protect long-term stocks from possible exercise and how to time when to sell covered calls and when to buy them back to close them. The Stocks studied include one low volatility stock, Johnson and Johnson and one high volatility stock Exxon Mobil. Time periods illustrated are 2001 to 2002, 2007 to 2008 and 2012. This strategy article is only available through purchase in the FullyInformed Shop for $25.00
Investors tend to jump around a lot, moving from stock to stock seeking whatever they deem to be the next greattrade. Instead I stay with the same stocks because I know that there are always trades within every stock and I get to know the trading pattern well. I have learned over decades of investing that it comes down to knowing the stock, knowing the pattern that has developed and knowing which strategy to use and when to apply it. The whole concept behind investing is about looking for and taking advantage of opportunities.
In this article from a reader, he presents how he used the 10-20-30 Moving Averages Rule for Trading Cisco stock. It covers the period from 2006 to 2008.
A Long Straddle is a pretty simple trade. Almost always, call and put options at the same strike are purchased. The strike chosen is usually at the money. The strategy is that by holding puts and calls and going out a month or more, the investor will benefit from volatility in the stock. If the stock moves up or down wide enough, the straddle will be profitable. By going out at least a month or more, this affords time for the straddle to be profitable. In this article an investor friend presents his preferred long straddle investing method. He sent this straddle trade for me to put on the site to show how powerful options can and often are. He felt it may be of interest to other investors.
Bull put spread strategy is more conservative than put selling with defined losses established right at the outset. The bear put spread is popular among option investors and is in wide use. Yet it is often not understand by many option investors which is a shame since while it may not at times provide as high an income as put selling, the fact that maximum losses are known at the time of establishing the trade can make a very big impact on a portfolio. Like any option strategy there are many variations to the bull put spread that offer even more income and protection. This article looks at Cat Stock and demonstrates a bull put spread.
As investors, we are all aiming for profit and income. It is these two components that will grow and compound our capital as well as provide a base of income to live on. The whole purpose in saving money, for many investor,s is to build a nest egg that they can live off as they age. Learning how to spot support and resistance levels in stocks is a prime component to successful investing. The first part of this article on support and resistance looks at understanding what support and resistance is and the tools that can be used to assist in determining where support and resistance in an asset such as stocks, may lie. The article then goes on to look at PepsiCo Stock and Johnson and Johnson Stock as it explains the importance of support levels for put selling and stock purchasing as well as resistance levels for closing sold puts and selling stock.
In the second part the series on Support and Resistance I discuss how I use the volume indicator tool and combine it with the stock charting tool to pinpoint support and resistance levels. Without being able to determine support and resistance in stocks, investors are often trading blindly and often find themselves buying at over-valued prices and selling for losses. Knowing how to find support and resistance will go a long way to avoiding this pitfall. In the article I present how daily volume is a principal factor of finding support and resistance levels. While simple in concept, it is such a valuable tool that I use it everyday on every trade. It is a huge benefit for buying and selling stocks and for options including my favorite strategy of put selling.
Paper Trading is not used by a lot of investors. This 3 part article discusses the importance of paper trading, the benefits, how to set goals and offers a step by step method of how to use paper trading to increase the profit potential of a portfolio as well as protect a portfolio from market corrections.
Part 1 – The Value and Importance Of Paper Trading: Many investors shy away from paper trading as they feel it does not offer “real trades” and without these real trades they feel they cannot benefit from paper trading. This is a mistake. Part 1 of this series shows the value and importance to all investors and why paper trading is largely misunderstood.
Part 2 – Setting Goals In Paper Trading: The second part of this series looks at the 6 goals investors should follow when paper trading to become better investors and benefit from establishing goals that will increase profits as well as protect a portfolio.
Part 3 – How To Use Paper Trading For Profits and Protection: The third and final part of this series presents a step by step process for investors to consider following which shows how the use paper trading to develop winning investment strategies that can grow a portfolio quickly and protect it from market weakness, corrections and bear markets. The third article in this series is available in the members section only. You can join the member section here.
When Put Selling or selling covered calls, understanding how to find support levels in a stock is key. With this knowledge investors can develop a variety of strategies, not just selling options, to consistently earn profit and income.
This article studies a highly profitable strategy of timing when to buy call options on the VIX Index to profit from period of low to high volatility. Having used this strategy for profit and income for many years, this unique strategy is for those who are patient and can wait for the profits to come to them.
This article explains further the Shark Options Trading Strategy and how it can be applied to a variety of Ultra ETFs as well as highly volatile stocks.
A look at a strategy to take advantage of selling naked calls against a declining large cap stock.
Naked Calls have had a bad reputation for decades but is it warranted? For profit and income strategies are naked calls any riskier than naked puts?
To profit with a variety of strategies while avoiding losses means understand that almost all stocks trade within ranges. Understanding how to spot and define those ranges is key to earn big profits while protecting capital invested from any losses.
One of my favorite strategies is setting up what I call a Put Selling ladder against a stock. Once the ladder is established it becomes a matter of adjusting the trade to earn double-digit annual returns but also to protect capital from losses.
This article looks at the 6-10-12-20 strategy to who how to make big profits using the Ultra ETFs during periods of pullbacks in market direction.
This article is written around an email from an investor wondering about a simply stop-loss method to help protect his positions in the event of a downturn in stocks or a run back up in stocks should leave his positions with losses. As an inactive investor who has little time to be constantly monitoring his positions, the investor needed some help setting up a simple but effective strategy to try to earn profits through a downturn and protect against a rebound. The strategy I developed is simple enough for inactive investors. I called it, the Line In The Sand Strategy.
Whenever the market direction begins to make a change investors worry about a small dip in stocks become a larger one. Investors in general would love to learn how to profit from a drop in the market as well as protect their portfolios from losses. To do this though they need to understand the clues that are being presented to them by the market itself. This strategy article looks at understanding the Bollinger Bands Squeeze. I look at how to read it, what the clues are to the squeeze pushing stocks higher or sending stocks lower. I then look at how to protect and profit through understanding how to read and use the Bollinger Bands Squeeze. Learning to profit from downside action in stocks is as important as benefiting from rallies.
Building A Fortress Dividend Portfolio is exactly as its name implies. An investor is constructing a dividend portfolio that is built like a fortress to withstand any assault from markets or geopolitical events. While the job of building such a portfolio might seem daunting, leap options can go a long way to making the task safer and easier than most investors realize. They are in fact one of the key components I use to construct my own dividend portfolio of stocks.
The focus of this article is to both profit from stock market downturns and higher volatility as well as protect capital in use. When stock markets take more than a dip, there are a lot of tools available to the investor to assist in timing trades and understanding the best course of action to be taking when profiting from a downturn in the market direction. The biggest problem though is getting that information quickly and being able to understand what is happening, within seconds. Investing today continues to improve as more and more information is made available to investors about almost every aspect of an index, a stock, a sector, a marketplace, a commodity, trends and much more. But with all that information, investors need a way to quickly know and understand how to react to the investing market and climate they are faced with and how to profit from it. This is where heatmaps are indispensable. While during periods of low volatility heatmaps play a less important role, on days of big point downswings, heatmaps can become indispensable.
PROFIT AND INCOME ARTICLES:
These articles are designed to assist investors in becoming better investors. I hope these article may get investors thinking about their own style of investing and consider alternatives as well as develop their own styles and strategies. To read an article, select the article title.
This article looks at a trade on Microsoft stock. The purpose of writing this is to show the technicals tools used to determine price points and timing to get into the trade and out of the trade. The article explains the importance of setting up a plan prior to the trade, and the significance of having clear goals and objectives in order to be consistent in profiting from investing.
This article looks at a trade to explains and show the value that having a plan provides and the potential outcome planning provides for an investor.
This article is designed to show the tools I use to try to avoid holding or selling puts on a stock that is on the verge of collapsing so hard that it leaves me with huge losses. These tools have saved my portfolio many times, particularly in bear markets.
When a stock collapsing 7% in a day I bring out the early warning tools and have a look at the stock. In this actual ongoing trade, YUM Stock fell 7% in a single day on Sept 29 2011. Here are the steps I take to examine the stock and determine if it is time to close the trade or whether it is an opportunity for a terrific gain when the stock bounces back.
One of the more difficult tasks an investor has is determining whether a stock is a potential candidate for investing in. This article looks at two different stocks to show the signals, warning signs and tools that can be used that can keep an investor away from troubled stocks and avoid a possible loss to his capital.
In this article I discuss using the VIX Index to gauge market direction in order to profit from market volatility and swings.
I believe stocks have to perform based on earnings or at least the belief that earnings are improving. Once the Fed money taps dries up, the floor under this market may get a little “creaky”. (Read the article Dance Near The Exit) Remember that markets are driven by fear and big players with billions of dollars in the market – the so called “smart money”. A whiff of a trouble and they will bail like they are fleeing the Titanic. In my opinion “smart money” is really no smarter than the retail investor, but their sheer size of holdings can push a stock to extremes both up and down if they are fearful. I have always believed that it isn’t fear and greed that drives stocks, but FEAR alone. There is fear of missing out on the rally and fear of losing capital in a decline. My strategy of the cautious bull is designed to combat this volatility and the possibilities of declines.
The problem for most investors is not knowing when to sell their “winning” stocks. Therefore when a stock turns down most hold on hoping for a recovery and then they convince themselves they will “sell to get out” in any rally. I believe there is a better way, depending on the stock selected, to recover quicker, move back to a profit position and then decide whether to “get out” and seek a different stock. To do this I have learned to combine options – namely covered calls and selling puts to assist in averaging down in a losing stock in order to generate a positive return. But for this type of averaging down strategy to be successful I have developed 7 rules which I follow.
In this article using YUM Stock I look at the stock after a fall to show how through using the ultimate oscillator an investor can determine if the stock is a geat buying opportunity or just on its way lower.
This article looks at a strategy to protect very long-term stock holdings through bear markets or severe corrections. A lot of investors, especially those who prefer buy and hold strategies rarely worry about a drop in their stocks’ value. Almost all of these investors are seeking dividend growth and they also hope for long-term capital appreciation. However there are some who do use a variety of strategies to set up protection levels in their long-term holds for that “just in case” scenario. This is because investing in stocks is incredibly risky. No one can judge what calamity might befall the economy, a company, global markets, commodities, currencies and so much more. As well many companies do slash dividends when revenue growth enters a period of lengthy and/or sharp declines. All investors have witnessed this type of occurrence if they have invested long enough. The strategy that some long-term investors use is the Strategy Of Percentages. In this strategy article I outline the strategy of percentages and show how since 1995 an investor who bought Bank of America Stock would have implemented the strategy, protected long-term capital in use and profited from it.
In this article I discuss understanding the signals that are advising when to place your capital at risk and times when the signs are advising to “go slow” and take on smaller positions. The rticle explains that there is no fast rule that says you must be fully invested all the time.
A “Squeaker trade” is one of those trades where you have sold an option (or bought one) and the stock is hovering right at the Option Strike Price by expiry. So what’s the best thing to do.
The majority of retail investors are not stock traders but are are really more dividend investing or dividend stock investors. Their investments really are comprised of dividend stocks or dividend stock funds that make up a dividend stock portfolio. Dividend stock investing has been popular for decades. Many dividend investors seek high yield dividend stock and many others search for the highest paying dividend stock. But developing a dividend investment strategy often can result in disaster when their is a dividend cut. When this happens, many investors sell their dividend stock often incurring large losses and regretting their dividend investment strategy. I believe this is a mistake. I believe many investors need to rethink their dividend investment strategy. That is the goal of this 4 part article.
In this article, using YUM Stock I look at the steps to take and how to apply the Ultimate Oscillator in determining whether or not a stock is about to bottom and bounce back.
When markets are in a downturn I turn to the SPY Puts to hedge my portfolio. This 3 part series presents how I use the SPY Puts to protect my portfolio against large losses in market pullbacks.
What should a small investor do when it comes to defensive stock investing? What can the retail investor do to beat the smart money at their own game. As anyone who frequents my site knows, I believe in staying within large cap, blue chip dividend payers. This 3 part series looks at the strategies I use when I invest in defensive stocks.
One of the best stock trades has to be my Bollinger Bands Strategy Trade. This trade provides substantial gains over a short periods of time making it ideal for investors not interested in holding stock for lengthy periods of time. This article looks at understanding exit signals when using the Bollinger Bands Strategy Trade.
The 10-20-30 Moving Average Trading Strategy uses moving averages cross-over points on a stock chart to try to pinpoint specific times to sell Calls, sell Puts, or buy back both sold Calls and/or Puts to lock in profit and avoid assignment or exercise. The objective of this type of trading strategy is to capture the majority of the value of the sold option. It uses the 10 day simple moving average and 20 and 30 day exponential moving averages to time entry and exit points. Microsoft stock is used for the example and there are two actual trades also available, RIM Stock and Cisco Stock to show the 10-20-30 Moving Averages Trading Strategy in action over a long period of time.
This article from April 2011 looks at the Federal Reserve’s Party in the guise of Quantitative Easing One and last year Two. In the article I discuss why it is best to folow the trend in such an instance but be fully aware that you want to dance near the exit and get out before the balloons burst and the lights turn off as the party ends.
In this article I describe the overall strategy I have used for the past 3 decades to build my portfolios.
The world is always fraut with problems and equity and bond markets always reflect them. Waiting for the perfect market environment in order to invest would mean never being invested. Investment portfolios need sound strategies which protect and provide growth despite the endless barrage of financial and political calamities. The problem for many investors though is what investment strategy to use. In this article I discuss how I approach a profit and income strategy and tweak it depending on the market environment. I explain how I view keeping a healthy mix of cash, bonds (fixed income) and equities in order to survive in any market environment.
This article looks at the checkered past of market timing and why so many investors believe it cannot assist them. Market timing is used daily and can provide investors with the ability to understand the market direction and how to implement different strategies for profit and income, based on what market timing indicators are telling them. It is important to set aside personal prejudices and arguments and instead focus on considering the possibility that by taking a few minutes each day to review market timing technical indicators, an investor could become better prepared for market changes. Market timing tools if used daily allow an investor to peer through the doomsayers, analysts, endless talking media personalities, ever worried economists, personal financial planners, and look at what the stock market is actually doing. The only way to growth wealth is to compound money over long periods of time and that requires an investor to stay invested in both bear and bull. It is through market timing that investors can develop strategies that allow them to accomplish just that. Market timing allows an investor to achieve profit and income in any market environment.
The Ultimate Oscillator is one of the prime technical timing tools I use every day on just about every trade to assist in providing profit and income as well as a daily outlook. This article looks at the settings I use for the Ultimate Oscillator as well as how I apply those settings to different times frames in order to establish overbought and oversold readings which are one of the most important signals for timing entry and exit positions. The Ultimate Oscillator can be used for stock trades as well as option trades including both put selling and selling covered calls. It is an excellent tools for doing spreads. The example in the article is the SPY PUT trades I do to hedge my portfolio against market declines.
The Rate Of Change Oscillator is not well known to a lot of investors. This interesting oscillator can be set up to signal when to get out of the market and when to get back in with amazing accuracy. This article explains the settings for the Rate Of Change technical indicator and how to use it to time both stock markets and stocks for profit and income.
When market direction is down have you ever considered the various Ultra Bear ETFs available or how about the HDGE Active Bear ETF. All of these ETFs can assist when the stock market gets in one of its “moods”. These can provide large profit and income returns. However hedging an entire portfolio with an Ultra Bear ETF is not quite as simple as many investors may think.
When a stock is rising it is difficult for investors to know when to sell their stock. They do not want to sell too early or too late. This article discusses a stop-loss strategy and how to apply it to time when a stock should be sold for profit and income.
When a stock within an industry group collapses, it can have far reaching implications to other members of the same group. Profit and income can quickly be wiped out when a stock falls precipitously. This article studies Intel Stock to see how pressures from its rival AMD Stock can hurt investors in Intel Stock and why having a plan is key to consistent profit and income in your portfolio.
Rolling options can be highly profitable and can be a strategic benefit to the investor. There are many reasons for rolling options and it is important to understand why you are rolling options before placing the trade. Rolling options improperly can take a profit and income trade and return big losses.
When it comes to profit and income strategies it is important to be in the market when it is moving up. When market direction is down it is important to preserve capital against market direction collapses while adding profit and income through owning those instruments that can grow in a market pullback. This profit and income article studies one of the oldest and most reliable indicators for timing market entry and exit for longer-term investors, the 200 day moving average strategy.
One of the best strategies I use combines the 50 day, 100 day and 200 day moving averages into a combination trade that allows me to know when to hold back capital from option selling and when to commit more capital to take advantage of market volatility and higher option premiums. This article explains what I look for in the 50 day, 100 day and 200 day moving averages which provides the signals for timing when to use more capital and when to use less.
This article looks at AGQ ProShares Ultra Silver ETF to explain why strategies fail for a lot of investors. Is it the strategy, the knowledge of how to apply the strategy, or the investor himself who contribute to a strategy failing to provide profit and income.
The notion that something is cheap comes down to price. For example is Aflac Stock cheap at $62.00? Is it cheap at $60? What about at $55.00? What about Ford Stock? Is Ford Stock cheap today at $16.00 or would it be cheap at $14.00? Then of course there is BP stock. Last fall it was trading at $42.50 and this year it is trading around $50.00. Wasn’t it cheaper at $42.50? The notion that a stock is cheap can be based on everything from the Price to Earnings or Price to Cash Flow to projected revenue growth and even the dividend yield. So when is a stock cheap?
Investors constantly gamble when they bet against the market trend. Why do so many investors do this? This article looks at the importance and value of never betting against the market trend but instead using the trend to earn profit and income consistently in order to compound capital and grow a portfolio.
I know the majority of investors do not believe in stock technical analysis to earn profit and income from stocks. This article shows that stock technical analysis holds a lot of merit even for the skeptical investor. The article explains how to use stock technical analysis tools to earn consistent profit and income in a portfolio.
When a favorite stock plunges how do I handle rolling out my sold option positions to continue earning profit and income, yet wanting to protect against both assignment and loss of capital. Here is one rolling in the money option strategy I have used for years. It allows me to roll out in time, reduce the number of put contracts at risk of assignment, earn income and free up capital for selling more options to earn additional profit and income.
This article studies how to keep rolling naked puts down to avoid stock assignment in a collapsing stock and how to do it profitably.
In this article I look at using the Volume technical indicator in order to follow a plunging stock to determine if support levels will hold in a stock. The Volume Technical Indicator is an excellent tool which can tell investors whether selling is slowing or whether there is more downside ahead.
Bonds make up 30% of my entire portfolio. This article looks at bond investing strategies I have used to assist my overall bond portfolio.
One of the goals I have when investing is to pick a quality large cap dividend paying stock and then earn enough from my trades to eventually own the shares through the profit I have made. Basically I am using other people’s money to own shares, collect the dividend and compound my portfolio.
The Shark Option Trading Strategy can mushroom a portfolio quickly with limited capital exposed to the markets. It is a strong strategy which can produce superior returns if applied properly. This lengthy article looks at the problems of slippage within Ultra ETFs and discusses what guidelines to look for when selecting Ultra ETFs or stocks to apply the Shark Option Trading Strategy against.
One of the main keys to my success is the ability to plan a trade before it is ever implemented. This article presents a trade in Nucor Stock that provided a nice return but more important, was a success because of careful planning. The article discusses what is involved in planning including planning for the trade not to work out in my favor.
I am repeatedly asked how to know when to go long on stocks and when to not commit capital. This lengthy article (2500 words) looks at a strategy that follows the overall market direction to advise investors when it is “safe” to invest in stocks and when they should not be applying more capital but instead pull capital out of stocks.
When a stock collapses investors tend to flee and all too often they get out of the trade with losses. Retail investors in particular are notorious for losing their money in a collapsing stock. Why is it that institutional investors understand how to handle a collapsing stock better than retail investors. Here is how I handle a collapsing stock.
The term stock market bubble is often bantered about. Yet few investors understand how to spot one and how to handle one as well as profit from it.
The problem that a lot of investors have is they look at a stock that they believe is “beaten up” and think they might be buying a bargain. This happens often. Often this is not the kind of company to put capital to work in. When is a bargain not a bargain.
It’s often seems a daunting task to start with a small portfolio and try to build it into a large nest egg. This article looks at questions posed by an investor who is holding just 3 stocks.
This lengthy article studies the decision-making process of rolling naked puts and/or closing them early to achieve optimum return.
Why would investors sell put strikes in what looks like a riskier put strike that expires in two weeks versus selecting a further out of the money put strike which pays more and has over two months to expiry. It would appear that the less riskier trade is taking the two month out trade. The answer though comes down to understanding risk to capital in use against the return.
Put credit spreads can provide exceptional returns if investors understand how to put together a put credit spread that takes advantage of a stock’s trading pattern.
Another article on credit spreads. Credit spreads, either calls or puts, can provide stellar returns and superior protection if done properly and at the correct time. This article is 2900 words.
The majority of stocks are highly speculative. The profit-making potential among speculative stocks is very high which is what tempts many investors to risk their capital. But losing capital slows the building of portfolios. To assist my speculative trades I developed the Weekly Wanderer Strategy years ago. It was originally designed for monthly option selling against speculative and/or more volatile stocks that had at least one billion in assets and a viable business model. It is designed to protect my capital from losses, pinpoint put strikes to sell, give entry signals and advise when to stay away from a trade.
This article gives a nice layout of a trade using the weekly wanderer strategy. For those investors looking to profit from trading weekly options this article is worth a read as it assist in further understanding of how the weekly wanderer strategy profits and protects a portfolio.
High profit generating trades are often filled with pitfalls. Trading options in the SPY ETF either calls or puts, requires an investor to understand fully when to enter a trade, how to establish and adjust a stop-loss and when to exit. Done properly these trades can give an incredible boost to a portfolio while at the same time protect capital from losses.
Getting big returns from trading usually requires daily access to be able to tradeand often numerous trades. For some investors they have neither the time or the expertise for this type of trading. Many investors are working full-time and do not have ready access to make trades throughout the day. I developed the Moonlight Strategy years ago when I was working full-time and raising my children. There was limited time available for investing and most of the research had to be done in the evening. I needed a strategy that required minimal work but could return 8 to 10 percent or better a year. Over the years I found a variety of methods to be able to boost the return and some years earned better than 15% annually in atrade.
Many investors cannot trade during the day. The Moonlight Strategy is for those investors who have only a few minutes each evening to review their trades and prepare for the next day. This article looks at using the moonlight strategy to protect and earn a stock’s dividend while never losing control of the underlying shares being held.
The Home On The Range Strategy is powerful. It can protect capital in use and provides strong fundamental and technical support for when and where to enter trades. Canadian stocks however, often trade different than US Stocks. In Canada a lot of stocks have low volatility and often so does the Toronto Stock Exchange. Low volatility combined with the manner in which options are poorly handled by the Montreal Exchange which manages options on the TSX and you have a recipe for limited growth. This strategy has been adjusted to accommodate stocks that trade on the Toronto Stock Exchange. This is a lengthy strategy article at 4000 words.
It’s always great when a trade works out, but often the best of trades can go wrong. This article looks at how to rescue a failing credit put spread before losses begin to heavily mount. This article is lengthy at 2800 words.
Although this article was written for the start of 2015 to explain how to stay profitable in 2015, the rules apply to any period in investing when the market appears tubulent, with higher than usual volatility and numerous whipsaws.
Every investor aims for big profits. The problem is our emotions get in the way and often those big profits become big losses. Here are some steps I learned decades ago which can help investors fight their emotions in the kind of climate we are presently trading in.
This article explains signs to watch which can warn that a stock is not going to react properly. These types of signs can be followed on most stocks that have been in an uptrend but are now suspect. What often looks like a good trade can easily turn against the position taken. There are though signs to watch for, which are shown in this article which uses Archer Daniels Midland Stock for its example. Staying out of harm’s way is a lot easier than most investors realize. The problem is most investors fail to act when the signals warn that the trade may fail. They finally do react when the trade has already failed and they are sitting with losing positions. By putting in place simple signals to watch and understanding what they are advising, investors can save themselves a lot of problems and losses later in a trade.
I am often asked by investors why I apply so much capital to different stocks rather than balance the capital equally among all trades. I prefer the Warren Buffett approach when it comes to my investing. This strategy discussion looks at my trades in Disney Stock to show why I prefer to apply more capital to some stocks rather than others.
I continually preach that Having A Plan is probably the most essential part of investing. I know from personal experience that having a clear plan is key to my success as an investor. Having a plan provides every aspect needed for proper investing, from controlling emotions, to knowing what strategy to select, to knowing when to get into and out of a trade. Having a plan controls losses and works toward providing a steadier stream of consistently winning trades. This is a very lengthy article at 7350 words and will require 16 pages if printed. But the length of the article is needed to show the importance of a trading plan, how to consider laying out a trading plan, how to adjust it and how to work from it. I have always felt that planning is essential to successful investing. I have had a trading plan since the mid 1970′s and I review it twice yearly and adjust it when needed. Reviewing and adjusting the trading plan keeps it fresh and helps me to stay focused on my stocks and my trading strategies.
In this article an investor asks whether “you can teach an old dog new tricks”. The answer is yes, if the old dog is willing to learn. The article deals with using a rescue strategy on naked puts and how any investor who takes the time to learn how to apply a strategy properly, can save their portfolio from a loss.
This article discusses approaching selecting from big cap stocks to determine which stock is the better trade and possibly avoid potential collapse. This article touches on the basis of understanding the criteria I use for stock selection how I judge stocks to avoid collapses.
The Leap Options are one of the areas I love to peruse when investors are dumping their shares in stocks I would own even for more than a year. Often though my leap puts expire out of the money and I end up just keeping the profits. Other times such as in the big bad bear of 2008 I ended up holding some shares that were assigned in January 2009. The key to this combination trade strategy is trading within short-term options and leap options. A lot of investing successfully has to do with staying in your comfort zone. This type of trade strategy does not require the investor to be very active, leaves lots of room for errors and provide a strong level of protection for those investors who worry about catastrophic losses.
Here is a strategy I have used many times when volatility rises such as it did in 2012 and 2011, let alone the bear markets of 2008 to 2009. This strategy takes advantage of high volatility to set up a trade which can be rolled month after month.
There are many different market conditions. Some markets are in stable uptrends for most of a year. Others though can be incredibly volatile which can include large whipsaws. When that kind of market emerges, I implement 12 changes to the strategies being used to compensate for the higher volatility.
This article came about from questions from an investor on how to build and protect his portfolio when dealing with stock investments. This is a lengthy article at 5100 words and will need 16 pages if printed. It is broken into 4 parts. Questions discusses include:
- allocating capital appropriately.
- diversification of capital among investments
- position sizing
- how to apply available capital where it will grow the most
- preserving capital when trading
Staying flexible in a trade is a key component to successive winning trades. In my opinion, adjusting trades when there is the possibility the trade may be in jeopardy and a profit can still be locked in is an important consideration to take. In every market taking losses is harmful to the overall portfolio. Locking in even a small profit continues to build a portfolio and preserves capital. It also means time, energy and capital does not have to be committed to try to recover losses, but instead can be used to generate additional income. This is a strategy article that looks at a key component in having successively winning trades and protecting capital throughout a trade. It is lengthy at 8 pages but covers the topic well and demonstrates how using strategies that allow flexibility can assist in keeping trades profitable.
Many investors believe options are “too risky” when in fact it is stocks that are risky and options are there to assist in reducing and controlling the risk of stock ownership.
When a company’s stock is declining it almost always will exhibit a pattern that always a signal there is something wrong with the company itself.
30% of my entire portfolio is always in and out of Bonds. Bonds can provide good returns if they are traded although many analysts believe the many years of good returns from bonds is coming to an end thanks to 6 years of interest rates at pretty well zero. I am not so sure about that. Perhaps for those who buy bonds and then simply hold them far into the future, returns may be smaller but for those who trade in bonds I believe there are still good profits but investors have to also be realistic about the amount of returns they can earn.
Staying out of harm’s way is a lot easier than most investors realize. The problem is most investors fail to act when the signals warn that the trade may fail. They finally do react when the trade has already failed and they are sitting with losing positions. By putting in place simple signals to watch and understanding what they are advising, investors can save themselves a lot of problems and losses later in a trade.
When actively trading a market direction portfolio built around Ultra ETFs that profit depending on the market direction, a stop-loss can become an integral part of that strategy. It can also save your capital from large losses.
Buying dips and selling rallies is not for everyone. It is difficult to know when the next drop, is not the start of something bigger. In the same way when a rally jumps the market, many investors are afraid to buy, fearful that they are buying at the top and a new downturn will follow. For most investors then, trading a whiplashing market is not easy and can keep nervous investors out of the market. That though means no earnings and no growth for portfolios. During such periods I developed various tips which I draw upon to remind myself how to stay invested but protective of my capital in a market filled with whiplashes and higher than normal volatility. Here are 9 of my tips that I use to tame a whiplashing market and continue to grow my portfolio.
Every week I receive lots of emails from members asking about trading for profits in a plunging stock. Here are the five steps I use that assist me in profiting from a plunging stock.
Investing in stocks, especially big cap stocks, is all about strategy. I take advantage of weakness and strengths to pick my entry points to build positions. I then use the “Milking The Cows” strategy which basically means I “milk” or keep rolling and selling the put strike for as long as possible and for as much as possible until either I am assigned shares or the stock moves so high that there is no point in selling the same put longer. This can be a basic strategy or a number of technical indicators can be used to assist in timing rolling out the trade.
One way to build confidence in a sideways market is to choose strategies that focus on protecting capital that is being used. Selling out of the money put options can protect capital since I am almost always selling at a put option that is below where the stock is trading. This gives the stock room to fall with the hope that the put strike I have sold will not be reached.
Not everyone enjoys or can sell put options all the time. As well many investors are more used to traditional investing where shares are bought and then sold for a profit. Unfortunately that does not always work. Instead I prefer strategies that stacks the odds of success in my favor. Those strategies need to include limited exposure to risk for my capital but still a decent return. To do this I developed a strategy years ago built around the buy-write method of selling covered calls. I have used this strategy for decades. I call it the Super Charge Buy-Write Strategy.
Tight trading ranges can create exceptional profit opportunities and one of the best ways to quickly identify possible trades is to use the heatmap. The heatmap gives a full overview of the market, all sectors and all stocks. It changes constantly throughout the day and the heatmap is exceptional at quickly steering investors to where the better trades are and best profits may be made.
Here is a strategy I have used every June since 1998 and modified in June 2010. I call this strategy the June Bustin Out Strategy.
One of the more important aspects of investing is to understand that all stocks are not equal when it comes to losses they can create in pullbacks and corrections.
When markets are caught in a moderate pullback studying individual stocks or sector specific indexes can assist in understanding overall market direction changes and trends. Often investors will note stock and index divergences when it comes to following the overall market direction. This can be extremely useful in providing guidelines for making profitable entry and exit trading decisions.
Stock investing is incredibly risky. Capital can be lost overnight in many stocks. The biggest problem that retail investors face is not understanding the stock they are trading. Much of this comes from the inability to have research resources available to the average investor containing reports they actually understand. It would be great if reports could be compiled and reviewed which basically indicated either “YES” this is a great trade or “NO” stay away. Unfortunately that just does not exist. Even the biggest investing firms in the world with large research departments stumble once in a while on stock selection. Without being able to research properly, it is amazing how often a retail investor will take a position on a stock after reading or hearing a tip. Without doing any homework to speak of let alone understanding the stock, retail investors tend to jump in. Sometimes they make money and many times they do not.
Leverages ETFs are designed to provide 2 or 3 times the daily movement on the underlying asset. In the case of SDOW, it is designed to provide 3 times a move lower in the DOW. While this can provide high profit potential it is also filled with risk especially for the average investor. By understanding these highly leveraged products investors can learn how to stay profitable while also protecting their capital at risk.
Big down days can really stack up the profits if you are holding leverages bear products like the SDOW or SQQQ. For many investors trading using Ultra Short ETF products can be daunting. But while trading these Ultra ETF products can be daunting for many investors watching the professional trader can make a big difference to the decisions the small retail investor is making. Knowing when to buy, when to hold and when to sell can be difficult choices but I often turn to the professional trader to assist me and instead of having one or two pros helping I know how I can have a thousand pros offering me guidance and it costs nothing for this information.
Learning how to use the spy put trade on big down days is among the easiest of trades and among the fastest ways to gain big profits. Learning how to spot the entry points is simple on some days and knowing when to get out is usually a matter of understanding past big sell-offs.
Bull markets can have big corrections. Often some corrections are one day wonders. Trading the trend in market direction is more difficult on the day after a big market collapse. This strategy discussion article looks at how to trade on the second day of a strong market pullback. The focus on day two of a collapse is to continue to bring in profits but also to protect capital from bounces and swings in market direction. Learning what signals to watch for and what tools to use as well as what products to be considering for trading can make a big difference to the returns achieved.
Not all trades are going to be winners. That’s just a fact of investing within risky assets which stocks are. However handling those loses, especially when they are losses in a highly vereaged product like the Spy Put requires experience and knowledge on controlling losses.
Even downturns, corrections and pullbacks have lessons to teach investors. From such events we can become better investors. We learn how to not only protect our capital from losses but how to generate significant income during periods of weakness. Learning how to profit in downturns is as important as making profits in uptrends.
There are many different strategies that can provide profits to investors but in general I believe that options combined with stocks will give the best returns. One of the strategies I use regularly around earnings is a strangle trade. They are setup to profit from the swing the stock often has the day after earnings are announced. Here is how I handle a typical strangle trade the day after earnings have been released.
Sometimes I prefer to work without a stop-loss. While this does work at times, more often than not it won’t and I will have removed a stop-loss right an the worst possible time. Here is why the use of a stop-loss remains essential for investors and the safety of their capital.
Sometimes trades that we enter get away from us. They either move too quickly or we react too slowly. Sometimes when a trade is starting to turn against us we wait, hoping the trade will turn back our way and we will still get out with our profit intact. Most of the time that doesn’t happen. In this article an investor sold naked calls only to watch the stock push higher by 25%. Now looking at huge capital losses, can this trade be rescued?
In 1974 as the market collapsed in one of the worst bear markets since 1929 and 1932, my mentor told me on December 1 that I should start my New Year’s now. The chart below shows the start of December in 1974 with the S&P trading at around $65.00. Yes that is right, $65.00. It had pulled back from $93 in May and from $99.80 in January. In October 1974 the S&P had reached $62.28 and analysts were incredibly bearish. Newspapers ran doom and gloom articles daily. The Arab oil embargo had ended in March but the market was caught in a “death spiral”. Nixon had resigned as President in August and Gerald Ford was President. But the bear market continued to ravage portfolios. So when my financial mentor told me to start my New Year’s early I was rather puzzled. Then he explained to me why.
This article looks at the 5 key signals I follow that tell me when to exit a Bollinger Bands Strategy Trade and lock in my profits. This strategy paper outlines exactly what I am looking for in each of the 5 key signals, how to read the signals and how to react to them. It studies exiting a trade in a number of ways and how the exit strategies for the Bollinger Bands Strategy Trade are laid out to safeguard the capital in use and secure as much of the profit as possible throughout the trade.