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November 15th, 2014 at 7:23 am
Just for new comers on planting your tees and building up you portfolio
Guide to Option and stock trading.
First where do we find stock for investing?
There are many sites and resources to find suitable stocks.
Subscribe to http://seekingalpha.com/ www.philstockworld.com membership
www.investorsplace.com www.fullyinformed.com
www.gamechanger.investorsplace.com membership
www.barchart.com www.stockcharts.com www.earningswisper.com
www.investor.com http://www.barchart.com/headlines/search.php?feed=BC&series=COD
http://finance.yahoo.com/ very important site for stock evaluations
Once you have find a stock start evaluating the stock.
Check stock on http://finance.yahoo.com/ study the stock on general profile what they do. Check on yearly and quarterly cash flow and balance sheet
Does the stock pay a dividend? Must have a trading volume over 250,000 per day, P/E ratio not over 25 to 30, check high and low over 52 weeks.
Check on present stock value. Enter any play at a dip and possible not on top of the 52 week trading range. Avoid to trade stock which make their quarter declaration during the same month. Do not trade stocks under 10$
Do not trade stocks under a market cap of 250 million Read key statistic on Yahoo. As well analyst estimates on Yahoo, any news info.
Once you got all this check on TOS the trading of options. Do you start with a Buy write or leap BCS? This depends largely on stock paying higher div. (over 3%) If they pay div. you will find the option premium they pay are lower than stocks which do not pay div. If you decide to go for the buy write you wish to buy the stock for a discount of say between 15 and 20 % which you can achieve by selling the leap call just at the money or slightly ITM. Obviously you decide to sell a put the same has to be well OTM. Check chart as said below.
Now you just about ready to place the first leap option BCS or buy write. Study the chart if you wish to reduce the cost of the BCS by selling a leap put. Check your chart what are the lowest points over the last year. Do not go much higher on the put as over the lowest points. Remember by selling puts you must like the stock at the given discounted price by the put sale.
Sell at least two positions so you will be able to sell short monthly calls against your leap position. You can always scale in with more leap plays if the play is still to your liking.
If entering a buy write you can sell the call and the put separate or you can sell as a strangle. The strangle is more difficult to fill, as the broker has a fixed price for both, when selling separate he can mess you more around. NEVER PLACE ORDERS ON MARKET VALUE. Always buy at the lowest price and sell at the highest price with Limit orders.
An order does not have to be filled immediately. But see if one part of the order is filled to have the pending part not hanging on to long, as the stock price can change say overnight.
Well this is just for starters.