PursuingWealth.com

PursuingWealth.com and its Owner have Moved.

PursuingWealth.com and its owner have moved. You can now find me and my options trading material at:

http://www.learn-stock-options-trading.com/

If you want to subscribe to the new RSS feed you can do so here:

http://feeds2.feedburner.com/online-options-trading-blog

To Your Success, Trader Travis
Learn Stock Options Trading.com

The Stork has Arrived....

Just dropped in to say that my wife finally gave birth to our first kid, DJ (David Jeremy).

 

Ok...gotta go, still in the hospital,

 

Travis

 

Covered Calls Are a Great Way to Earn Additional Income From Your Stock Portfolio

Covered Calls Are a Great Way to Earn Additional Income From Your Stock Portfolio
By Travis W

The rumors are true about covered calls. You can use them to make double-digit returns from the stock market and earn a steady monthly income from your stock portfolio. You have to first learn about stock options before you are able to use this strategy. The learning curve for stock options is usually what prevents most people from ever learning about covered call options.

You also have to become familiar with selling stock options. Selling is called "writing" in the world of stock options. So when you hear someone talk about writing call options they are just referring to someone selling covered calls.

Covered Call Analogy

The process that an option seller goes through is similar to how a car dealer leases cars. Suppose a dealer leases a car to someone. The way these leases work is that the buyer pays $X a month for a set period of time and at the end of that time period they have the "option" or the "right" to buy the car at the agreed upon price.

If they choose not to buy the car and want to turn it back in, they lose out on all the money they paid the dealer. However, if they choose to buy the car, they pay the agreed upon price and the dealer has to deliver the car to them. The dealer now has one less car on his lot, but he/she is not worried because they get to keep the lease money that was paid while the buyer drove the car for the first few years.

So How Does Selling Covered Calls Work?

You're selling stock options, more specifically a call option. This type of option gives the buyer the right to buy stock from you. You have to already own the stock though. So if you own 100 shares of company XYZ, you would sell 1 call option to someone giving them the "right" to purchase the stock from you. In exchange for selling these rights, the buyer is going to pay you money. This money is yours to keep no matter what happens in the future.

You can repeat this strategy every month and earn a nice monthly income. Over the span of a year it can amount to a double-digit return on your investment.

If the buyer decides not to buy the stock from you then you keep your stock and the money you were paid for selling the option. Otherwise, you would have to deliver them the shares of stock.

To fully understand how covered call options work and to learn how to trade stock options, visit Learn-Stock-Options-Trading.com.

http://www.learn-stock-options-trading.com/ is a free web based options trading course that provides a way for beginners to understand the complex world of options trading.

Article Source: http://EzineArticles.com/?expert=Travis_W
http://EzineArticles.com/?Covered-Calls-Are-a-Great-Way-to-Earn-Additional-Income-From-Your-Stock-Portfolio&id=2549306

Ino.com and Marketclub Review

For those who are interested here is a short Ino.com and Marketclub review. It list some of the services they offer.

Regards, Travis

Stock Trend Analysis - Save Time by Automating Your Trend Analysis Routine

Stock Trend Analysis - Save Time by Automating Your Trend Analysis Routine
By Travis W

Performing a stock trend analysis can be a time-consuming task. It's well worth the amount of effort, but nonetheless it takes a lot of time. I've found a way to automate the process and I never realized how much time it would save.

Another routine task that I've put on automatic pilot is finding quality stocks so I can trade their stock options. In the past I would review the Investor's Business Daily looking for companies that were in the top 1% of their industry.

This would take roughly 20 minutes or so a day. Now I have the results e-mailed to me and I just upload the symbols to my trading platform. This task alone saves me about 2 hours or more a week.

From this point, I usually would perform my daily stock trend analysis by reviewing the stock charts looking for possible trading opportunities. I am a trend trader so I trade in the general direction of the trend and I hate to waste my time looking at, or dealing with, stocks that are not trending.

Each night performing my stock chart analysis I would review 100 or so charts. Now I have someone else do the stock trend analysis, send me the results, and I only look at the charts that show promise.

So to sum things up here is what a normal trading routine would look like:

1. You first spend a lot of time researching company fundamentals in order to find a group of quality stocks. They are usually the best stocks that money can buy. The best stocks to buy usually have the most attractive stock options.
2. From this point, you do a bit of stock chart analysis and keep only the stock charts that show promise.
3. Out of the charts that you keep, you will perform stock trend analysis each night or weekend looking for potential trading opportunities.
4. After you find a potential trade you further analyze the chart and then pre-select the option that you're going to buy.
5. If things continue to go in your favor, you make the trade and then manage it effectively.

I've always been told that I should outsource, or automate, as much as my trading as possible so that I can spend my time doing the things I enjoy most, like spending time with my family.

I admit, I was a bit skeptical, but I coughed up the money and automated a few parts of my trading routine.

Here is what my automated routine looks like:

1. A list of top stocks to trade are e-mailed to me and I upload the symbols to my trading platform.
2. Each evening after the market closes, I have the trend analysis results e-mailed to me and I only look at the stock charts that show promise.
3. Once I'm alerted to a possible trade opportunity, I make the trade and sit back and wait for an e-mail or text alert signaling me that my preset criteria has been satisfied. This is both for entries and exits of my trades.

Life is great! I have so much more time on my hands and my wife is certainly happy, because the time saved is now spent cuddling with her on the sofa.

Automate Your Trading Automating parts of your trading routine is the key to a stress free way of trading. There are many free, or low cost services available to outsource your trading needs.

Due your due diligence and find a service that you can trust.

Corporate companies outsource their work so they can effectively build their business and focus on the key areas that are important to the business.

Traders should do the same.

Find someone you can trust to handle a few simple task. Once you have more free time you can spend it doing the things you enjoy most, or use the time to further advance your trading skills.

Treat your trading like a business, and it will be as profitable as a business.

I've created a video outlining how I used my trend analysis tools to open a trade. Within a few days I had a gain of $6,200. It also helped that I had a list of the absolute best stocks to buy.

"Work smarter, not harder."

Save time by having your stocks analyzed for free. Go to http://www.learn-stock-options-trading.com/stock-chart-analysis.html for more details.

Travis W. has been an avid options trader for years. His website is designed as a free web-based options trading course that provides a way for beginners to understand the complex world of options trading.

Article Source: http://EzineArticles.com/?expert=Travis_W
http://EzineArticles.com/?Stock-Trend-Analysis---Save-Time-by-Automating-Your-Trend-Analysis-Routine&id=2583162

Relative Strength Index Trading - Generating Reliable Buy Signals With the RSI

Relative Strength Index Trading - Generating Reliable Buy Signals With the RSI
By Travis W

The relative strength index is a very simple, but powerful momentum oscillator used by investors who invest in the stock market. Over the years it has proved to be a reliable technical indicator to help traders enter and exit trades. It is often called the relative strength indicator or RSI for short.

In this article we will only focus on the buying side of the trade.

The relative strength index is classified as a momentum oscillator. For this particular momentum oscillator it measures price momentum. Is the momentum increasing in the "up" direction or is the momentum increasing in the "down" direction?

The relative strength index works just like all the other momentum oscillators:

• It indicates whether the market is moving to new highs, new lows, or is just meandering in the middle
• It uses recent price and volume data to aid in assessing whether a recent change in trend will continue or revert to its prior state
• And last but not least, it's used to pin point overbought and oversold signals

The RSI is plotted on a scale ranging from 0 to 100. The magnitude of the stock's recent price movement (gains vs. losses) is compared and then that relationship is translated into a number ranging from 0 to 100.

The center line for the RSI is 50. Above 50 represents bullish territory and below 50 represents bearish territory.

If the number produced is 50, it means that the stock is sitting in the middle. It's trending neither up nor down; it's sitting somewhere in the middle.

The RSI is only reliable if it's used on trending stocks.

Making Money with the Relative Strength Index

There are three conditions you look for before you enter a trade with the RSI:

1. Overbought: A technical condition that occurs when there has been a lot of buying and the price of the stock is considered too high and susceptible to a decline.
2. Oversold: A technical condition that occurs when there has been a lot of selling and the price of the stock is considered too low and a rally in prices is anticipated.
3. Divergence: When the stock price is going in one direction and the technical indicator is going in the opposite direction.

With the RSI, oversold conditions are indicated by values in the 0 to 30 range and overbought conditions are indicated by values in the 70 to 100 range.

Sometimes you'll see traders use 80 and 20 for overbought and oversold signals. I use 70 and 30.

1. If the stock has been trending up, but the relative strength indicator starts to trend down, there is a divergence and you would prepare to enter a bearish trade (down direction). It's the vice versa for bullish trades.
2. Traders look to establish bullish positions (up direction) when the relative strength indicator dips below or touches the 30 line and then rises back above it.
3. Traders look to establish bearish positions (down direction) when the relative strength indicator rises above or touches the 70 line and then falls back below it.

Once the stock becomes overbought, oversold, or has price divergence you should always wait for some type of confirmation that a price reversal has indeed occurred.

Do you want to see proof of how well the relative strength indicator works? If so, I've found one stock in particular that caught my eye. Boeing Inc. had an 85% gain in three months after the RSI triggered for a buy signal.

Now those types of trades don't happen all the time, but they do happen nonetheless. I've illustrated this example on my site to give you a visual example of how the relative strength index works.

Check out the relative strength indicator in action.

Don't miss out on these types of gains again!

The author is chief trader and founder of http://www.learn-stock-options-trading.com Learn-Stock-Options-Trading.com is a free web based options trading course that provides a way for beginners to understand the complex world of options trading.

Article Source: http://EzineArticles.com/?expert=Travis_W
http://EzineArticles.com/?Relative-Strength-Index-Trading---Generating-Reliable-Buy-Signals-With-the-RSI&id=2520821

The Ultimate Momentum Oscillator For Huge Gains

The Ultimate Momentum Oscillator For Huge Gains
By Travis W

Momentum oscillators are commonly used to find trading opportunities. One that I use often and have found to be ideal for new traders is the Williams Percent R oscillator.

The oscillating category of indicators "oscillate" or zig zag up and down. Most oscillators fluctuate above and below a center line or between set levels as its value changes over time. Oscillators can remain at extreme levels (overbought or oversold) for extended periods, but they cannot trend for a sustained period.

A momentum oscillator measures the acceleration or deceleration of price rather than the actual price level. As the price of a security rises, price momentum increases. The faster the security rises, the larger the increase in momentum. Once this rise begins to slow, momentum will also slow.

Now that we have the technicalities out of the way, here is how I use the Williams Percent R oscillator:

The indicator measures overbought and oversold market conditions. It's usually plotted on a chart using negative numbers with a scale ranging from 0 to -100. With Williams Percent R, oversold conditions are indicated by values in the -80 to -100 range and overbought conditions are signaled by values in the 0 to -20 range.

On most stock charts you will see two horizontal lines at the -20 and -80 levels. These lines represent the overbought/oversold areas of the indicator and serve as your "trigger" lines. The trigger lines will alert you to when a new trade is on the horizon.

Here is the simplicity of the Williams Percent R, it's one line and all you have to do is wait for it to either swing down to -80 or rise up to -20, that's it. When the prevailing trend is rising, I generally wait for the oscillator to drop to -80. Once it reaches this level and begins to rise, I wait for price to confirm a change in trend and then I enter the trade.

I know what you're probably thinking, "that that sounds too simple." At least that's what I thought when my millionaire mentor first showed the method to me. My first year or two of profit was solely from the Williams Percent R momentum oscillator.

I was skeptical at first, but my results turned me into a believer.

A momentum oscillator, or any indicator for that matter, acts as an alert to study price action a little more closely. It is therefore best, as with all these types of indicators, to wait for the underlying price to change direction before going with the trade.

The Williams Percent R is indeed my favorite momentum indicator. It has by far made me more money than any other indicator I've used. Even though this has been my experience that does not mean that it's the best indicator for you to use.

Visit Learn-Stock-Options-Trading.com to find the options trading indicator that's right for you. http://www.learn-stock-options-trading.com/ is a web-based home study course for investors who want to learn the basics of stock options trading. I "share" my option trading tips, techniques, and strategies with you instead of "selling" them to you.

Article Source: http://EzineArticles.com/?expert=Travis_W
http://EzineArticles.com/?The-Ultimate-Momentum-Oscillator-For-Huge-Gains&id=2425573

Technical Analysis Indicators Were the Key to My Option Trading Success

Technical Analysis Indicators Were the Key to My Option Trading Success
By Travis W

When I first learned about technical analysis indicators I couldn't wrap my head around all the terms such as; overbought, oversold, leading, lagging, etc., etc. But the more I studied them the more I began to see how effective they were.

Technical analysis indicators allow me to predict a stock's price movement with a fair amount of accuracy. As an options trader I also use them to produce buy and sell signals.

Nothing is guaranteed though. As I stated above, the indicators allow me to predict a stock's price movement with a "fair amount of accuracy." It's like predicting the weather. The indicators don't guarantee what is "going" to happen; they merely guide me in preparing for what is "likely" to happen.

Pretend that the stock's price movement is the weather and the technical indicator is a weather satellite. A weather satellite (technical indicator) can warn you that a storm is coming (prices are going to fall) so that you can prepare for it accordingly (protect profits or enter a new trade).

So What are Technical Analysis Indicators?

Technical analysis indicators are mathematical representations of market patterns and behavior. They are formed by plugging information, such as price and volume, into a mathematical formula that produces a data point. Several data points are collected over a period of time and are usually connected by a thin line. These are generally the squiggly lines you see on a stock chart.

Two types of technical analysis indicators I use are leading and lagging indicators.

• A leading indicator "generally" precedes price movement and I use it to generate buy and sell signals.

• The lagging indicator is my confirmation tool. After prices have been trending for some time, the lagging indicator will produce a signal that the trend is changing. The signal happens "after the fact." It essentially solidifies any signal that the leading indicator gives me.

There are also two conditions to become familiar with: overbought and oversold.

• Overbought is a condition that occurs when there has been a lot of buying and the price of the stock is considered too high and susceptible to a decline.

• Oversold is a condition that occurs when there has been a lot of selling and the price of the stock is considered too low and a rally in price is anticipated.

Now that we got the technical details out of the way, let's get into the specifics.

As I studied technical analysis indicators, I started noticing a few correlations. I noticed that I produced better trade results when my leading and lagging indicator both gave me the same buy or sell signal.

After realizing this I started using the leading indicator to produce my buy and sell signals, but would wait for confirmation from the lagging indicator. If the lagging indicator produces the same overbought or oversold signal then I'll usually enter the trade.

For example, I often use Williams %R to generate buy signals, and MACD to confirm the buy signal.

The combination of a leading and lagging indicator together has been extremely powerful for me. It's a very straight forward and simple way to trade, but most of all it works. For some reason, new traders often struggle with simplicity.

Here is the pattern I've noticed. They search the internet, read every blog, and buy products from all the gurus in an attempt to find the "best" technical analysis indicators to use. If the system is too easy, like mine, they move on because simple is "boring."

They'd rather have 12 indicators on a chart only to find out that not only do the indicators produce conflicting signals, but now they are more confused than they were before.

Please don't be misguided. More is not better. You don't want two or more indicators on a chart that are essentially the same. For example, don't have two indicators that both measure volume.

Just remember that technical analysis indicators are nothing more than tools used in technical analysis. They've been a great tool for me, and I would not have been able to produce my 100%+ trades without them.

If you're looking for an easy way to learn stock options trading, and/or want to learn more about using technical indicators then visit my site.

I created Learn-Stock-Options-Trading.com to be a web-based home study course for investors who want to learn the basics of stock options trading. I "share" my option trading tips, techniques, and strategies with you instead of "selling" them to you.

Article Source: http://EzineArticles.com/?expert=Travis_W
http://EzineArticles.com/?Technical-Analysis-Indicators-Were-the-Key-to-My-Option-Trading-Success&id=2328119

Charting Stocks - A Basic Lesson on Reading Stock Charts

Charting Stocks - A Basic Lesson on Reading Stock Charts
By Travis W

As I learned how to trade stock options, it was hard for me to find a good lesson on charting stocks. I kind of just figured it out on my own. Since options are derived or come from stocks, it's essential to know how the price of the stock is behaving as this will greatly affect your option's value.

It's no different than doing science experiments in school. You collect data (stock prices) and then that data is plotted so you can see the overall big picture of what is going on. There are also several tools (technical indicators) that you can use to help you read stock charts, however they are beyond the scope of this lesson.

Technical analysis is the formal name for analyzing and charting stocks. There are some traders who are pure technical analysis traders. They use the chart and nothing else. According to technical analysts, the chart can yield important clues to how a stock will perform in the future.

Charting stocks can protect you from big losses and help you further your option trading gains. In order to fully take advantage of what the chart is telling you, you must first understand the basics of reading stock charts.

A stock chart is simply a graphical representation of the stocks price over a set period of time. The chart shows you at a glance how a stock has performed.

There are three 3 basic types of stock charts (bar, line, and candlestick) and depending on your trading style, each chart will serve its own unique purpose. Regardless of what type of stock chart you use, all three do nothing more than reveal the buying and selling patterns of the investors. This is something that is hard to discern by reading stock quotes in the daily newspaper. That is why charting stocks has become so invaluable.

My wife thinks a stock chart looks like a hospital heart rate monitor. I too wondered what all those squiggly lines and numbers meant when I first started charting stocks.

4 Key Areas of Every Stock Chart

There are 4 key areas you want to become familiar with when charting stocks:

1. Identification Section
2. Time Frame
3. Volume Bars
4. "X" and "Y" axis

Let's pull up a stock chart and go over these key areas. For our example we will be using the chart of Potash Corporation. To follow along go to Marketwatch.com and in the top right corner type in the symbol "POT".

Identification Section

• Company Name: Potash Corporation
• Trading Symbol: POT
• Stock Exchange Where Traded: New York Stock Exchange "NYSE"
• Current Date: (top right corner)
• Days Price Change: opening price, days price high, days price low, and closing price
• Volume: how many shares of the stock were traded for the particular time period
• Change: this is the day's dollar change compared to yesterday's closing price. The dollar change and the percent change will be listed.

Time Frame: the chart will display what time frame you are viewing (1 year, 6 months, etc.). It is highly recommended to change the time frame to one that suits your trading style. Looking at a 3-6 month chart is necessary if you have a short term investing plan, and 1-5 years if you have a long term investing plan.

Volume Bars: volume is often called the heart of the stock market. It's a key indicator of supply and demand. By looking at the volume bars you can get a good feel for the strength behind the stock price movement. A stock moving higher on heavy volume is much more likely to continue climbing than one that is moving higher on light volume.

"X" and "Y" axis: the "X" axis is the bottom portion of the graph, running horizontally, and it flows left to right. It's the portion of the graph that has the time frame that you are looking at. The left side is the past and the right is the present. We use the past as a reference, but we trade from the right side of the chart. We trade what we see now.

The "Y" axis is the right side of the chart, running vertically, and flows top to bottom. This portion of the graph has the price action.

Essentially for the beginner, charting stocks boils down to three things:

1. You're going to look at the correlation between a stock's price and volume activity (as shown by the price and volume bars).
2. You're going to look at the chart and determine if the stock's price has been trending up or down. If it's been trending up, I buy call options. If it's been trending down, I buy put options.
3. You're going to determine where the stock's support and resistance levels are. Support and resistance are areas where the stock has had trouble proceeding past, or an area where the stock halts and changes direction.

As you flip through your stock charts, you'll start to see stocks that look interesting. Jot them down and these will be the stocks you'll eventually use to build your daily watch list. You'll then apply other tools (technical indicators) to the chart to further pinpoint trading opportunities.

A stock chart can provide you with a wealth of knowledge as long as you know and understand what you're looking at. Basic charting knowledge combined with other stock indicators can immensely improve your trading skills.

Charting stocks has helped me find several profitable option trading opportunities, and it's a skill that becomes easier over time. So if you're going to be an options trader then learning how to read stock charts is a must.

Are you looking for an easy way to learn stock options trading?

http://www.learn-stock-options-trading.com/ is an educational website that provides a self paced home study course for investors who want to learn the basics of stock options trading. Come let me share my option trading tips, techniques, and strategies with you.

Article Source: http://EzineArticles.com/?expert=Travis_W
http://EzineArticles.com/?Charting-Stocks---A-Basic-Lesson-on-Reading-Stock-Charts&id=2310168

Stock Options Premium - Understanding the Price Behavior of Options

Stock Options Premium - Understanding the Price Behavior of Options
By Travis W

A stock options premium is simply the current market value of the option. In other words, it's how much it costs to buy the stock option. In trading it's also referred to as the "ask price."

Understanding options pricing is a complex topic and probably one of the toughest concepts you'll encounter as you learn about options trading. However, I'll present you with the basics and a few rules of thumb to keep in mind.

If you just blindly start trading stock options without having at least a basic understanding of why options behave the way they do, then you're going to be in trouble and possibly lose a great deal of money. It's like being a person who doesn't understand that it's a bad idea to go swimming in shark infested waters when you have a bleeding leg.

Stock options are very different from shares of stock. They have very specific and unique characteristics. It is these characteristics that are going to determine if you are able to make a profit from the purchase of the option.

Stock Price Effect

• With a stock price "increase", a call options premium will increase (you'll make money), and the put options premium will decrease (you'll lose money).

• With a stock price "decrease", a Put options premium will increase (you'll make money), and the Call options premium will decrease (you'll lose money).

Strike Price Effect

The strike/exercise price of an option is the "price" at which the stock will be bought or sold when the option is exercised. There are three different terms for describing the stock price to strike price relationship

• Out of the Money: Calls (stock price lower than strike price), Puts (stock price higher than strike price)

• At the Money: stock price and strike price are the same or close to being the same

• In the Money: Calls (stock price higher than strike price), Puts (stock price lower than strike price

The more an option is in-the-money (ITM) the more expensive it will be, because it has more value to the holder. This value is called intrinsic value.

The farther an option is out-of-the-Money (OTM), the cheaper it will be.

An at-the-Money (ATM) option, price wise, is in the middle and is slightly cheaper than an "ITM" option.

Options Premium and Extrinsic Value

The extrinsic value (time value) of an option is the dollar value that is placed on the remaining life of the option.

• The farther out you go with the options expiration month the higher the cost will be.

• The extrinsic value portion of the options price dwindles down on a daily basis, this is called time decay.

• Once an option moves to ITM then it will start gaining value rapidly and the effect of time decay will be negligible because intrinsic value will take over.

The Effect of Volatility

Option Volatility is a measure of risk / uncertainty.

• High volatility: higher option premium

• Low volatility: lower option premium

Options Premium Illustration

Here is an over simplified illustration so you can visually see how all the components come together to make up the options price:

ITM($3) + Time Value ($1) + Volatility ($1) + Interest rate ($.60) + Dividend ($.10) = $5.70 Option cost/premium.

As you can see there are several components involved in stock option valuation. As you venture deeper into the world of stock options trading these concepts will become second hand nature to you.

If you're looking for an easy way to learn options trading then visit my site.

http://www.learn-stock-options-trading.com/ is a web-based home study course for investors who want to learn the basics of stock options trading. I "share" my option trading tips, techniques, and strategies with you instead of "selling" them to you.

Article Source: http://EzineArticles.com/?expert=Travis_W
http://EzineArticles.com/?Stock-Options-Premium---Understanding-the-Price-Behavior-of-Options&id=2268946