The firstconsideration of course is picking the right stocks for theprogram. Lets say you really like stock DEF,but it has run up so much lately that at 130 you feel it will godown consider selling the 70s naked or without purchasingthe stock. Stock options have become avehicle for speculation on their own as players trade thederivatives much in the same manner as regular equities. Lets say the stock price volatility andthe price of option contracts available for the stocks.

Part7 OPTIONLEAPSA friend sent me some technical charts on the DOW that shows ashortterm top forming around the beginning of which wasfollowed by correction. On the other hand you could buythe strike LEAP Call for 22. 35 and make nearly thesame profit 13. 75per share or 137. 50 profit on 2,235investment. Please check this site for more lessons and options tradingstrategies in the future. Thepurpose of this essay is not to discuss stock picking, but tooutline the strategy of the overall portfolio. These lessons are provided by Mike Burton Tayoneein our ChatRoom Introduction Welcome, come in, relax and join ourinformal look at options trading.

And finally the yields 2. 40 or 3. 2 but addthe upside profit potential of owning thestock. This is due to the greaterpossibility that the underlying stock will reach the strike priceor move in favorable direction. Althoughthe procedures vary from one brokerage house to another, itis good idea to discuss this matter with your individualbroker. Also the account is increasedby the sale of the underlying security. The smart money on Wall Street is employingvarious techniques, including stock options to improve the totalreturn on their investments.

The specific stock on whichan option contract is based, in this case ABC, is called theunderlying security. LEAPS Or Longterm Equity Anticipation Securitiesare longterm stock options that provide the owner the right topurchase or sell shares of stock at specified price on orbefore given date up to three years in the future. Thepurpose of this essay is not to discuss stock picking, but tooutline the strategy of the overall portfolio. Types of Options There are three types of optionsAmerican, European and Capped. And finally the yields 2. 40 or 3.

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