that girl's voice on the right literally just killed me.
I'm awaiting to start a new long term trade ( 2 years ), consistently 5% to 10% a month return. For the advance option readers, those who trust me and know options, the advance stuff like buying leaps, buying and selling calls..... and prepared to lose $2000 if I screw this up... PM me LOL. I will keep you in my mailing list each time I execute the trade. Right now I'm just waiting for the right time. Only the advance traders, else wait for my course to start mid year =P
Meanwhile, my fav KURT again =D
that girl's voice on the right literally just killed me.
Most people who look into the world of investing, options will definitely pop out with horror stories. Behind every horror story, it comes with complacency.
For me, I use options strategies to lower my risks while getting higher gains compare to a regular investor and I call this the unfair advantage. On top of the unfair advantage, if my trade goes wrong, I have repair strategies. It comes to a point, when you see what I do, you realize the concepts I use ( with an actual live portfolio to show ) you will realise it's very possible for anybody.
One of the many things that can prove confusing to new options investors is the jargon: puts, calls, buy, sell, write, long, short, expiration, strike, in the money, out of the money, diagonal, covered, naked, sell to open, buy to close, and so on, seemingly ad infinitum. I'd like to expand on two particularly common options terms and why they are synonymous.
One of the simple strategies I use is writing options. By receiving premiums instantly upon writing, I have instantly lowered the cost of purchase.
Write = Sell to Open
In any discussion regarding selling to open an option position, you'll almost always see the word "write" used. In that context, "write an option" means "sell to open an option" -- that is, go to your broker and tell him to open a brand-new option position for you by selling it. But why use the word "write"? It's confusing.
What follows is strictly my own speculation, but I think it might be write ... er, right.
Remember, an option is a contract between two people. A put, for example, is a promise made by one person to another person in which the first person agrees to buy shares at an agreed-upon price at a time of the second person's choosing, up until some future date.
These are very standard contracts; if it helps, you can actually think of them as paper forms with blanks to be filled in. The strike price goes here, expiration date there, agreed-upon premium over in this spot, legalese language defining and explaining everything comes next, then a signature down at the bottom. As the seller of this contract, you're the one filling in the blanks. You are, in effect, writing out that contract and then shopping it to potential buyers.
Thus we use "write" to mean "sell to open."
Who Is It?
So to whom, exactly, did we sell that contract? Probably a market maker, or maybe another investor, like a hedge fund. In truth, it doesn't really matter. With a stock, there's a buyer and a seller. We don't really care who they are (or why they're interested), as long as they're willing to transact with us. With options, it's the same situation. We just sell our contract to ... someone. It doesn't matter who.
Why did they buy it? Doesn't matter. They have their own motivations.
What are they thinking when they exercise it or let us close it early? Doesn't matter.
And finally, when we close the position, from whom are we buying it? You guessed it: Doesn't matter.
Regarding that last point, there's sometimes a tendency to think that the person on the other side of the "buy to close" transaction is the same one who bought it from us in the first place. In fact, that's almost certainly not the case. You see, the original buyer could have sold their side of our contract to somebody else, and that person could have sold it, and on and on. It could have traded hands a dozen times, or it could have stayed put. Our "buy to close" transaction could even be with another market maker opening a new position or closing an old one.
Thankfully, we don't need to keep track of all that. As far as we're concerned, the details of matching up buyers with sellers happen automatically behind the scenes. You likely don't concern yourself with the mechanics of the transaction when you buy or sell shares of stock; there's no reason to do so here, either.
In short, don't worry who's on the other side of the contract. Just be glad there's someone there willing to buy or sell what you want to sell or buy.
Below is just my personal view on the outlook of 2016. This year with many bears, I do see another sideways year this year, but with a strong finish. Why?
Here are the very bullish factors supporting stock prices:
1. We have likely seen a massive wipe out of margin long positions.
2. We have blown up psychology with massive bearish psychology at hand. (This is very bullish )
3. We have a weakening dollar (this is bullish )
4. We have very low interest rates (this is bullish )
5. We have very low input costs (oil and labor, this is bullish )
6. We have a massive melt-down in biotech happening (this is bullish )
7. We have a 25% corrections in place in the Nikkei and the DAX-0.73% (this is bullish )
8. Massive bearish sentiment by major brokerage firms for 2016. (Last year they were all bullish looking for an up-year of 10% on average and they were all wrong)
9. Terrible technical conditions (breadth, divergences, etc) - These work in contrary ways. Everyone sees them as negative. They are negative when people are selling to raise cash (which is bullish ).
10. Very high corporate profit margins (very bullish ).
11. Plenty of corporate cash on hand for mergers and acquisitions ( bullish )
So the foundation of the market is very constructive from many perspectives.
The negatives are:
1. Rapidly rising default risk around the world as ZIRP and NIRP takes hold.
2. Falling PMI's signal softening economic activity
3. Corporate Buybacks can't continue forever, especially with rising default risk
4. Rising rates to corporate borrowers (Rising yields on HYG0.12% , falling HYG0.12% prices)
5. China: Weakening outlook. Draw downs in reserves to support an overvalued currency. $99 billion drop announced today to the lowest levels since 2012.
6. Jobs numbers in the US have massive seasonal adjustments which are hiding the worst numbers we have had in many years.
7. Demographic challenges means that US Growth will stay low (and steady) for two more decades. Read Harry Dent's books.
8. China's demographics are where Japan's were in the late 1980's and very bearish long term.
Those are the main points that I have in my head at the moment that will see-saw prices back and forth across the range for the remainder of the year.
The reason for the strong finish to the year? The election will be out of the way. The election is having profound impact on psychology and the year-end will be a strong quarter.
All the negative sentiment has led to a growing concern among investors and financial media that a recession may be on the horizon. However, after looking at some important data points, it's my opinion that the likelihood of a near-term U.S. economic recession is low.
1. Higher unemployment rates are one of the most widely recognized indicators of a recession. For example, in December 2007, the national unemployment rate was 5%, and it had been at or below that rate for the previous 30 months. At the end of the recession, in June 2009, it was 9.5%.
As of the most recent reading, the U.S. unemployment rate is 4.9%, the lowest it's been since the end of the recession. Not only is the unemployment rate low, but job growth continues to be strong, averaging about 1% to 2% growth year-over-year since 2011.
2. Wage Growth Is Accelerating. Decelerating or falling wages are another strong indicator of a recession. However, lately wage growth has been accelerating, at a three-month moving average of about 3.1% in December. In 2015, inflation was between -0.20% and 0.73%; as of January 2016, it was 1.37%, , making this real wage growth all the more encouraging.
3. Retail Sales Have Picked Back Up Lately. Retail sales have been in a downtrend for a couple of years. However, as of data compiled through Feb. 20, the year-over-year change in weekly shopping center retail sales has bounced back up to about 3%, suggesting an improvement for overall retail sales in the months ahead.
I recognise there are lots of technical people that visits this site, so let me provide something technical.
The most recent reading in November showed a probability of 4.06%.
Keep investing, keep vested. Cheers!