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Article Archive For Jerry Kopf

  • Avoid the call-writing hazard by Jerry Kopf

    ARTICLE SYNOPSIS ...Avoid the call-writing hazard by Jerry Kopf An option may sometimes be a good buy. Other times it may be a good sale. Sometimes you should buy long term, sell near term. Sometimes the opposite should be done. To participate in the market without the ability or flexibility to use different option strategies that address different market conditions is bound to cost money in the long run. -- Jim Piper A gentleman from Detroit called recently to find out the feasibility of squeezing a bit more income from a $600,000 portfolio of long-held common stocks. As its trustee he was pleased with each sto...

  • Fault-prone options traders by Jerry Kopf

    ARTICLE SYNOPSIS ...Fault-prone options traders by Jerry Kopf ""The propensity to gamble is always increased by a large prize vs. a small entry fee, no matter how poor the true odds."" --Warren Buffett, CEO of Berkshire Hathaway Dreams are stronger than reality. This adage is proven daily by lottery ticket buyers who buck odds of 12 million-to-1, hoping to win life's great jackpot. Traders in stock options also make bets, but the nature of their betting is far different from plunking down $5 for a Quik Pik. Where the lottery is a game of pure chance, options are a game of skill and experience. Options players ca...

  • Scale-down buying and scale-up selling by Jerry Kopf

    ARTICLE SYNOPSIS ...Scale-down buying and scale-up selling by Jerry Kopf Professional traders, like the average retail speculator, are often right and often early. Good option traders promptly jump on a developing trend. But the cost of buying a wasting asset too early saddles the buyer with a temporary loss. Later, when the forecast proves correct and the calls climb sharply, the benefit of scaling down becomes evident. Of course, many traders will abide by the maxim: Never average a loss. For market makers, that may be a good rule. In a bind they can hedge calls or puts with other options. The average retail ...

  • Christmas tree spread - the all-purpose strategy by Jerry Kopf

    ARTICLE SYNOPSIS ...When a football team breaks from the huddle, the players set up at the line of scrimmage in a formation. Usually, it's the I or T formation. As the center snaps the ball, each player knows exactly what to do. There is no guesswork, no deciding at the line. Gaining a first and 10 depends on how well each play is executed. Investors who expect to profit from put and call strategies should apply this strict football discipline to option trading. The most versatile strategy that offers the average retail trader a structured approach to trading options is a type of spread knows as the Christmas tr...

  • Revamping mediocre buy-write strategies by Jerry Kopf

    ARTICLE SYNOPSIS ...Revamping mediocre buy-write strategies by Jerry Kopf Stockbrokers usually introduce the average retail investor to option trading with a simplistic buy-write I strategy. Buy the stock and sell (write) a call option against it. The mechanics are straightforward. The seller or writer of the call option is establishing a contract with the purchaser of the call, promising to deliver shares of a stock at a certain price (the strike price) on a certain date (expiration date). The buyer pays the seller of the contract a fee (called the premium) to assume this risk. At expiration, if the stock is be...

  • Option shooters vs. spreaders by Jerry Kopf

    ARTICLE SYNOPSIS ...Option shooters vs. spreaders by Jerry Kopf Option market timers and option relationship traders occupy major places in the spectrum of call and put investors. Timers or ""shooters"" go for the ""home run"" by simply buying premium (i.e., going long a put or call). Relationship traders grind out small but consistent yardage by stacking probabilities in their favor. Because they are skilled at spreading and know beforehand what an option's price ""should"" be, that is, its theoretical value, they capitalize on price discrepancies. Market timers make subjective decisions based on: News -- Mont...

  • Options: Let price come to you by Jerry Kopf

    ARTICLE SYNOPSIS ...Options: Let price come to you by Jerry Kopf The average retail trader's first option transaction is often profitable--but rarely do rookie option traders know the actual reason behind their profits. Call it beginner's luck. If they win at first, they think they are walking on water. They annualize one week's return and start planning an early semi-retirement. Once luck ends, a newcomer's limited experience along with the swiftness of price movement causes a rash of painful losses. The undeniable fact is there is no quick method to learn to trade well and consistently be on the plus side. Cal...

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