ARTICLE SYNOPSIS ...Working Money: Using Breakdowns by Len Yates Breakdowns are handy patterns to keep an eye on when you're trading. Pattern trading is one of the most interesting ways to trade the markets. And one of the most reliable patterns to trade is a breakdown, which occurs when a stock experiences a swift selloff. Humans have a tendency to trickle into things -- as in an entry into a market -- but rush out in a stampede -- as in an exit from a tumbling market. Sometimes, a news announcement or a rumor is all it takes to trigger a ministampede when the news is perceived to be more significant than it real...
ARTICLE SYNOPSIS ...Breakdowns are handy patterns to keep an eye on when you're trading...
ARTICLE SYNOPSIS ...Playing the ""somewhats"" by Len Yates Tired of waiting for the market to do something significant and you want to steer clear of naked writing? This article describes a way to play what I call the ""somewhats"" -- times when you expect the market to go somewhat higher or somewhat lower. There is a very good strategy to apply in times like this. It's called a ""credit spread"" or ""vertical credit spread,"" and it has two distinct advantages: You can profit handsomely from a modest change in the underlying security and, if you choose out-of-the-money options, time is on your side. While you'r...
ARTICLE SYNOPSIS ...Succeeding with options part 1 by Leonard Yates An option is one of the most flexible forms of contractual agreements ever developed. Options may be used to take advantage of almost any type of market scenario one can imagine. There are option strategies that can be used to profit from the expectation of increasing, decreasing, or stable prices, or of high or low market volatility. Other strategies may be used to exploit situations where an option may be under- or overpriced relative to other options or the underlying asset. Options are usually available with many different strike prices and ...
ARTICLE SYNOPSIS ...part 2 Succeeding with options by Leonard Yates As promised in the first half of this article, here are three safe and reliable methods for succeeding in options without forecasting the underlying security. Method #1: Temporary mispricings Options frequently trade for as much as a one-half point difference from theoretical values for short periods. In such times of temporary mispricings, you should buy undervalued options and/or sell overvalued options. Strategies can be found that minimize your exposure to price movements in the underlying asset if desired, while waiting for option prices ...