Option Trading Tips - How To Get Paid For A 'Promise!'

Written by James Thomas

Continued from page 1

Because you receive this $0.50 per share, your overall purchase price (should you be assigned) is lowered by $0.50 to $9.50.

Shouldrepparttar stock fall and you be forced to buy it, a great way to keep this cash flowing and atrepparttar 150404 same time continue to reduce your risk is to simply turn around and start writing covered calls on it.

That being said, it's never a good idea in my opinion to write naked puts on a falling stock. Always look at a stock's chart for:

1) Moderate uptrends.

2) Sideways trends, especially 1-2 months AFTER a steep sell off.

If you go to: http://www.stockcharts.com and pull uprepparttar 150405 QQQQ chart forrepparttar 150406 first quarter of 2003, you'll find a great example of this second pattern.

During this time I began writing naked puts onrepparttar 150407 QQQQ and then when I was eventually assigned I then wrote covered calls onrepparttar 150408 QQQQ profitably for a number of months.

In sideways or rising markets, writing naked puts to potentially aquire stock (and be paid while you wait) and then writing covered calls onrepparttar 150409 stock when and if you are exercised, may well berepparttar 150410 ultimate strategy for generating a cashflow income fromrepparttar 150411 markets.

Also, considering that a large majority of options are never exercised, much ofrepparttar 150412 time you may never even be required to buyrepparttar 150413 stock.

When it comes to writing naked puts, you often get paid for a 'promise' that you don't end up having to keep. Now that's what I call leverage!

Happy option trading and investing!

James Thomas is a successful private option trader and has created http://www.option-trading tips.com as an informative, no-nonsense resource full of useful tips and information designed to help option traders and investors to become more profitable.

Day Trading the Index Futures - How to Judge Good Entries

Written by Mike Reed

Continued from page 1
repparttar market. Here's why. Usually, if you chaserepparttar 150344 market for your entry, you'll get filled aboutrepparttar 150345 same timerepparttar 150346 crowd's emotion is exhausted. The market will pull back and you'll have to get out immediately (if you're smart). Onrepparttar 150347 other hand, if you're stubborn and you don't get out immediately, you'll have to suffer throughrepparttar 150348 pullback and *hope* thatrepparttar 150349 trend continues before your stop is hit. Ifrepparttar 150350 market gets close to your stop, you'll be tempted to moverepparttar 150351 stop away just a little bit. Once you give in torepparttar 150352 temptation, you've got an expensive trading habit that may eventually take you out ofrepparttar 150353 business.

Whenever you find yourself *hoping* thatrepparttar 150354 market will come back and get you out of a bad position, you really have to head forrepparttar 150355 exits *now*. Don't even think aboutrepparttar 150356 commission, or allrepparttar 150357 time you spent waiting forrepparttar 150358 setup. just get out.

QUESTION: What if there is no pullback?

Ifrepparttar 150359 market breaks through support and keeps going down without a pullback, you just have to be a pro and let it go. Allrepparttar 150360 lost opportunity inrepparttar 150361 world won't take your account balance down, but chasing high-risk, low-probability entries will cost you.

Mike Reed is author of TradeStalker's RBI Trader's Updates. He has been trading the Market for 23 years. His support and resistance numbers have been published on the internet since 1996. Mike's nightly support and resistance zones are specific and incredibly accurate. He offers an unlimited free trial of his nightly TradeStalker RBI Trader's Updates. http://www.TradeStalker.com Copyright 2005 Mike Reed

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