We Bought A House For $17,500Written by Steve Gillman
Good Homes Under $50,000?My wife Ana and I found cheap homes for sale all over during a seven-week cross-country trip, and we even bought one in a pretty little town in mountains of western Montana. We paid $17,500, spent almost $2000 to fix it up way we liked it, and lived there for several months before selling it for $28,000. You can see a photo of our little pink house on our website http://www.HousesUnderFiftyThousand.com. This wasn't a fluke. There really are great towns where you can still find cheap homes for sale. Cheap Homes, Nice Town: An ExampleIn Anaconda, Montana you can fish for trout, go to a three-dollar-movie in a beautiful old art-deco theatre (named 5th most beautiful theater in U.S., according to Smithsonian), drop some nickles in a slot machine (a dozen casinos), eat at a fine restaurant, stop by bar for a dollar beer, and buy a house for less than $30,000 - all within a four block area! There are good schools and churches, a library with fast internet service, and wildlife (including bears and mountain goats) a few hundred yards from downtown. Why There Are Cheap Homes For SaleThe reason there are so many cheap homes for sale in Butte and Anaconda, is simple. There aren't many good jobs left. I personally found jobs in Anaconda easily-but not good ones. People left area in 80's especially, after mines and smelters closed. This exodus has left one-in-seven "housing units" in Anaconda vacant, according to 2000 U.S. census. This has driven down prices of houses dramatically. Since both towns still have all basic ammenities, are cleaner now, and are recovering, they are great places to retire to, or to move to if you have an internet or other non-location-based business. The economic situation is primary reason you can buy a cheap house in many parts of country. These are towns that have seen troubled times, but are often recovering, and with good reasons. Anaconda, an example we know well, now has a ski resort, a Jack Nicholas golf course, and beautiful scenery. The houses cost four times as much if you go an hour in any direction, and those higher prices are will reach Anaconda eventually.
| | Straddle Strategies in Option TradingWritten by Steven T. Ng
The straddle strategy is an option strategy that's based on buying both a call and put of a stock. Note that there are various forms of straddles, but we will only be covering basic straddle strategy. To initiate a Straddle, we would buy a Call and Put of a stock with same expiration date and strike price. For example, we would initiate a Straddle for company ABC by buying a June $20 Call as well as a June $20 Put.Now why would we want to buy both a Call and a Put? Calls are for when you expect stock to go up, and Puts are for when you expect stock to go down, right? In an ideal world, we would like to be able to clearly predict direction of a stock. However, in real world, it's quite difficult. On other hand, it's relatively easier to predict whether a stock is going to move (without knowing whether move is up or down). One method of predicting volatility is by using Technical Indicator called Bollinger Bands. For example, you know that ABC's annual report is coming out this week, but do not know whether they will exceed expectations or not. You could assume that stock price will be quite volatile, but since you don't know news in annual report, you wouldn't have a clue which direction stock will move. In cases like this, a Straddle strategy would be good to adopt. If price of stock shoots up, your Call will be way In-The-Money, and your Put will be worthless. If price plummets, your Put will be way In-The-Money, and your Call will be worthless. This is safer than buying either just a Call or just a Put. If you just bought a one-sided option, and price goes wrong way, you're looking at possibly losing your entire premium investment. In case of Straddles, you will be safe either way, though you are spending more initially since you have to pay premiums of both Call and Put. Let's look at a numerical example: For stock XYZ, let's imagine share price is now sitting at $63. There is news that a legal suit against XYZ will conclude tomorrow. No matter result of suit, you know that there will be volatility. If they win, price will jump. If they lose, price will plummet. So we decide to initiate a Straddle strategy on XYZ stock. We decide to buy a $65 Call and a $65 Put on XYZ, $65 being closest strike price to current stock price of $63. The premium for Call (which is $2 Out-Of-The-Money) is $0.75, and premium for Put (which is $2 In-The-Money) is $3.00. So our total initial investment is sum of both premiums, which is $3.75.
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