Options and Baseball - part 3

Tuesday, April 21st 2009 @ 10:37 PM (1 ratings)    post viewed 551 times

Louis Monsour

If you had that extra $35,700 with which to trade and you would have optioned the same stock using as much of the $35,700 as possible you would have realized the following profit:

Not difficult to see where and how you should be working your money, or better said, where and how your money should be working for you.

You just saw a prime example of why trading options is better than investing in stocks. Now let’s…

COMPARE OPTIONS TRADING TO OTHER INVESTMENT VEHICLES

CD INVESTMENT

If you invest $100,000 into a Bank of America high yield Savings and CD Account for a 12 month term at the current rate of 2.10%, does that sound like a good investment to you? 

Let’s say you earn $2,100 for the year. 

Then comes tax time and you happen to be in the 25% tax bracket, you will be required to pay $525 of that $2,100 to the IRS. 

Now let us take into consideration the cost of living increase which is usually between 3% - 4%.  We will now calculate at 3% the value of the original $100,000 ($100,000 x 3% = $3,000). 

$100,000 - $3,000 equals $97,000.  $97,000 + $1,575 equal $98,575. 

So your original $100,000 which earned $2,100 in interest for the year is now worth $98,575.

Does this sound logical or profitable?  I don’t think so either….

Simply putting your money in the bank at .001% interest is even more appalling.

Soon, I will post a letter on how to begin monitoring and getting ready for successfully trading the market.

Good luck, God’s speed,

PROSPERITY is the name of the game…  

            So LET’S GET STARTED ….

               LET’S MAKE IT AND KEEP IT!!!!

                &nb sp;              and LET’S PROSPER!!!

You may use and disperse this report so long as no part of its contents including author’s name and the website are altered in anyway.

Property of: www.ProsperityScoiety.com 

where membership is free and the knowledge is priceless.

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Options and Baseball - part 2

On Tuesday April 7, 2009, you could have purchased or optioned Google (GOOG) stock and controlled 100 shares for 10 days.  On Friday April 17, 2009, you could have sold the shares or option for a profit.  How much of a profit depends on whether you traded the stocks or options.  See the tables below. 

If you had purchased the Google Stock *

If you had optioned the Google April 360 Call

If you had that extra $35,700 with which to trade and you would have optioned the same stock using as much of the $35,700 as possible you would have realized the following profit:

Read part 3...

Good luck, God’s speed,

PROSPERITY is the name of the game…  

         So LET’S GET STARTED ….

           LET’S MAKE IT AND KEEP IT!!!! 

                &nb sp;    and LET’S PROSPER!!!

You may use and disperse this report so long as no part of its contents including author’s name and the website are altered in anyway.

Property of: www.ProsperityScoiety.com 

where membership is free and the knowledge is priceless.

*          If you are wary of the figures and the fact that this trade took place in live trading situations and not in hindsight please visit www.ProsperitySociety.com and click on the Talkshoe link on the left side of the front page and listen to the archived Make It and Keep It Show from April 7, 2009.

**        To check the accuracy of the figures used go to Yahoo.com, click on the Finance tab, enter the symbol GOOG in the window next to “Get Quotes” and hit enter.  When Google prices come up on the screen hit the link on the left side for Historical Prices and scroll down to April 7, 2009. where you will see that the low for the day was $355.31 and the high was $363.75.

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Options and Baseball - part 1

Louis Monsour

Great success in the stock market can be more than just a possibility. It can be virtually an absolute as long as you possess the knowledge and the proper method of applying that knowledge. Fortunately, there exist certain trading principals and investment approaches which do achieve such success in the market. Option’s trading is my area of choice and when used properly it can and will generate dynamic and positive profits on a daily basis.  Let me compare and illustrate Options trading with baseball.

Baseball coaches instruct their players to simply get on base and then they rely on the next player to do the same. When enough players follow those coaching instructions, it guarantees that the man on base will ultimately score.  Coaches rarely, if ever, tell their players to go up to bat and hit a home run.  The statistics for strikeouts are staggering among home run kings.  Baseball players who aim for base hits at every bat (such as the great Pete Rose) rarely strike out. The more often a player reaches base the higher percentage of him scoring a run and his team winning.

The tried and proven way of succeeding at Options Trading is to pursue base hits and avoid swinging for homeruns.  For example, a recent trading account, with a principal amount of $35,000 which I managed for a client while training him on Options Trading, called for an average of $175 profit per trade.  The way the score card broke down for the two months managed by me was as follows…

Every time a trade generates a profit equal to the average per trade ($175) you score a single, twice ($350) the average you score a double, three times ($510) the average you score a triple and anything equal to four times ($685) the average and more is a home run.

Winning baseball teams have players who generate many base hits and thus score many runs.  Successful traders follow this same formula over and over and over.

How to calculate your minimum anticipated profit per trade average?  I like to calculate a minimum per day trade, then I figure out how many trades per day I would like to complete. By following this simple rule, I then calculate my per day trade minimum.  Some traders only look at per day averages. I think that if you also know your per trade minimum it makes it easier to find and enter trades. 

In the above account we decided on entering 1-3 trades per day and anticipating a profit average per day of $250.  We made trades on 33 days, of the possible 42 days of trading, and achieved or surpassed the daily average 29 of the 33 days; and managed to generate a total of $24,404 for a total daily average of $642.74. If you follow the above score card the daily average resulted in a double or better 87.88% of the time. Any baseball team with those kinds of positive statistics will always end up in the playoffs and usually they win the pennant and hopefully the World Series.

If you noticed in the table above we scored 89.29% of the time.  That is an excellent win percentage and if you notice that 62.50% of the time we generated extra base hits or home runs.

OPTIONS TRADE vs. RISKY  STOCK PURCHASE

I am sure you have heard some people proclaim, “It’s a great time to invest in the market, stocks are cheap and it is a great time to buy and hold.” 

Listen, the only way to make money is for you to control your money for as long as possible and as much as possible.  Investing in the traditional stock market where your money is at the mercy of investors, brokerage houses, market manipulators and the government is not my idea of making money.  Learn how to play blackjack and go to Las Vegas. At least that way you will have had some fun while you lose your money.

Part 1 of 2

Good luck, God’s speed,

PROSPERITY is the name of the game…  

          So LET’S GET STARTED ….

                LET’S MAKE IT AND KEEP IT!!!!

                &nb sp;         and LET’S PROSPER!!!

You may use and disperse this report so long as no part of its contents including author’s name and the website are altered in anyway.

Property of: www.ProsperityScoiety.com 

where membership is free and the knowledge is priceless.

rate this post: