Posts Tagged ‘bond’

Generate Monthly Income By Writing Covered Calls

Wednesday, January 4th, 2012

Writing covered calls can be a safe way to make money from your stocks. When you write an option you are selling it, as you are the owner of the stock, securities, or commodities. You cover a call option when you actually own stock that is associated with the option contract.

When call options are sold, the writer is paid a premium on each share of the contract. This means that a 100 share contract will earn $300 at three dollars a share. This money is yours to keep no matter what occurs. You are also the one who sets the amount for the strike price of the stock or commodities.

Ideally, it is best to sell options on stock and have the options expire. In this way, you are retaining the stock and also keeping the premium money. Once an option is expired you can write a new option on the same stock.

Maybe you want to sell an option contract for 100 shares of stock and a strike price of $60. You might have paid $45 per share for the stock, originally. If the price goes all the way up to $70 a share, your option holder will buy your stock at $60 a share. However, you make money from the premiums and also from selling your stock.

Suppose you sell a contract for one hundred shares of stock with a strike price of fifty dollars. Your original purchase price is forty dollars per share. The stock may soar to sixty dollars per share. When this happens you are going to lose your stock as the owner of the option will be able to make money. However, you are still making money on your stock sale and your option premium.

Writing covered calls as a style of trading is conservative as you face few risks. You also have the opportunity to make money more than one way. If you own stock and do not expect it to go up in value a great deal in the near who is interested in buying stocks or other investments such as commodities. You can purchase shares based on their ability to make money from options. You also can control the amount of risk that you take.

If you are looking into conservative investments, writing covered calls makes sense for several reasons. You can make money from stocks and stock options. You also have some control over the risk factor on the investment, because you own the stock and control the options terms. There are more chances than normal to make money this way.

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High Yield Covered Calls Are Good For Your Portfolio

Tuesday, December 27th, 2011

For those new to the concept, ‘covered calls’ are a conservative investment strategy. To get high yield covered calls (HYCC), however, sometimes requires using a screener, which can really help. For those new to trading, this system is making all the difference in the returns gained by investors.

One of the basics that should be understood by traders is that stockholders have rights. One of these is that they are allowed to buy and sell shares any time they chose for the current market price. Selling this right to another trader for a predetermined cash price is the basis for the HYCC strategy.

The agreed-upon price is called the strike price and is paid when an agreement is made with another trader. It should be remembered, however, that it also has a set expiration date. The HYCC serves as a contract. This allows the stockholder, or seller, to transfer underlying stock at the price they chose. For those who own shares outright, it is called “covered calls”.

For those who are using a HYCC strategy, profits on returns are often quite handsome. This requires knowledge of the process, especially when the market is unstable. Still, if handled correctly, as much as a 5% return on investment could be generated. On the other hand, it can result in a less than desirable outcome as well.

There are only three directions an investment can go. It can move up, remain stable, or decline. All of these influence potential profits. By adding the HYCC, the outcome can turn in an investor’s favor. This is because when stock is offered through this option at a future date, with a preset price, there can be at least some guarantee of a good return on the investment.

A premium is charged when using a HYCC option that is paid by the buyer. The transaction will result in the strike price plus the premium. Although less than the maximum may be recouped if stock prices rise significantly, if they decline or remain stable the seller is ensured they will get more than they paid for each share. If the buyer decides not to close by the expiration date, however, the seller still collects the premium.

For those new to this concept, high yield covered calls may seem confusing initially. It is important, therefore, to use sites that include tutorials. The visual aids and demonstrations provided help with understanding how this strategy works.

Born To Sell’s site offers detailed information about covered call trading. Searching for high yield covered calls is a whole lot faster when you have a good covered calls scanner.

In-The-Money Covered Calls Can Be A Safe Bet

Friday, December 23rd, 2011

When you invest in ITM or in-the-money covered calls, it can be a safe way to trade. You have the chance to make profits on stocks, no matter which way they go. Here are some ways that ITM covered calls can generate profits for you.

You do not have to own stocks to own options. However, covered call options are only written or sold by those who own the stock, security, or commodity. These kinds of options can be OTM or ITM. OTM is out-of-the-money, and this means that the option cannot be exercised. If an option is in-the-money, it can be exercised as the strike price is lower than the current stock price.

At first, it may not seem profitable to write an ITM option. Yet, when you take a more detailed look, you will see how it works. For example, you but 100 shares of Widgets Inc for $15 a share. You might write an option contract with $14 as the strike price. Perhaps you are expecting to get as much as $2 premium for each share.

Someone may wish to buy your ITM option in hopes that your stock will increase in value before the option expires. It is not a bad investment, as it is already ITM and will not have to go up much to be profitable. Also, there is no need to worry about anyone exercising the option right away, as the premium price more than offsets the strike price.

If your stocks continue to increase in value, you will be required to sell them at the agreed strike price. Yet, you still keep the $200 premium on the sale of the option contract. Even though you lose $100 on the sale, you still gain $200 on the premiums. After broker fees you still could be ahead.

If the stock drops or stays the same, the option will expire. You keep the stock and you also keep the $200 premium. You can sell options on the same stock next month, if it does not drop too far. In fact, if your stock drops, you may try to sell options with a higher strike price, but it may be difficult in some cases.

If you are thinking of investing in stocks, securities, or commodities, there are a lot of choices to consider. Covered calls can be a safe and effective investment. In the money covered calls can be a good way to make cash on stocks that you expect little change. They will be easy to sell and you can make a profit no matter what happens.

Born To Sell, https://www.borntosell.com/, is a web site dedicated to covered calls. If you sell in the money covered calls then you limit your upside potential to just the time premium part of the option.

Choosing the best Investments

Monday, December 12th, 2011

Historical Data: This is probably the best indication of how a stock will do in the future. I made a fortune buying a Dow 30 company as they rise and fall with the average like clockwork. When the Dow was down real low, I purchased all I could get, knowing that the market would eventually turn around.

News: Before you invest in anything you should understand what the company or commodity is doing in the news. Even something that does not seem significant could be if the news outlets get a hold of it. A stock may look like a steal until you read that their main product just had a safety recall or something similar.

Tax Fees: Some investments do not pay much, but have no tax consequences like municipal bonds. If you are considering this, make sure you understand exactly how much in taxes you will save by taking the smaller return on your investment. There are some great calculators on the Internet that will give you this information in no time.

Charts: Some people live and breathe for the charts and do very well at it. However, this should only be used as one indicator and you should not trust them completely. The charts always work perfectly until they do not, and you are left wondering why. However, they can be used as a basis and use your other research to complete the whole picture.

Running the Company: Always know the person running the company that you are going to invest in, before you make the purchase. Find out what there management style is and what they typically do when they take over a business. Even if they were never in the top job before, you can usually put it together based on how they ran other business units.

Understanding: Be sure you understand what the company does and what could happen that would make the company do well or go under. You should never invest in anything you do not completely understand. This is the best advice I can give you. If you do not know what is involved with a stock, you will not have any good understanding of when you should buy and when you should sell.

TV Personalities: I do not think these guys are gurus or even good at what they do. However, considering other people thing very highly of them, they do have the power to affect stock prices. If one of these guys wakes up in the morning and says company X is no good, the company will lose some shareholders and the price will go down. Make sure you know where everyone stands.

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Overview Of Blue Chip Stocks

Tuesday, October 26th, 2010

Blue chip stock is very simply put, the stock of an established company that has stable earnings. It is the kind of stock that does well even in a volatile market. These stocks pay regular dividends.

The blue chip in the game of poker is the chip which has the highest value among the other chips. But the term was first used to describe stocks in the early 1920’s. It was used by Oliver Gould of Dow Jones which is an American publishing and financial information firm.

He noticed several trades of a certain company which had very high value stock and stated that he would like to write about these blue chip stocks. The term was first used in reference to stocks of high price. Today it is used in reference to high quality stocks.

There are no criteria to determine whether the stock of a company is blue chip stock. However there are certain characteristics, that most investors would agree, which qualify the stock to be blue chip stock.

The company should have strong market reputation. It should have an established track record of stable earnings and should pay regular dividends to common stock holders. The company should also have high credit ratings as well as diversified product lines.

The Dow Jones India Titans 30 Index is a price weighted average of 30 blue chip stocks in India. This index tracks the share prices of leading players in the various business segments over a twelve month period. The index is reviewed every March.

Blue chip stocks are very important while creating a diversified investment portfolio. It is a type of common stock. By purchasing these stocks, the investor becomes a part owner of the company.

These turn out to be a very safe form of investment as they offer great long term rates. Blue chip stocks normally feature in the investment portfolios of non- profit organizations and conservative individuals.

There are many ways to invest in blue chip share. The shares may be acquired by a broker or a purchase plan direct actions. There are also mutual funds that specialize in blue chip share. Another way to invest in blue chip share purchase options. The option gives the investor the right but not the obligation, to buy or sell shares at an exercise price set at a later date.

Although blue chip stocks offer a certain amount of investment stability, it is important to remember that all investments entail a certain amount of risk. And blue chip stocks sometimes offer a false sense of security. After all, some of the world’s biggest financial disasters have involved renowned blue chip companies.

While planning an investment strategy, investors should obtain a detailed and realistic advice on the date of entry and exit and return expectations.

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Stock Trading Made Simple

Saturday, October 9th, 2010

Stock is a representation of the paid-up capital or invested in a business enterprise. Part of the stock is the smallest unit of ownership in a company. The total number of shares must be disclosed at the time of the formation of the organization. Ownership of a number of shares into shares of a corporation, each shareholder of the organization.

An individual that has purchased shares of a company’s stock is called a shareholder. As a shareholder of a company, an individual has certain rights. These rights include the right to vote to elect member of the board of directors and others such matters. These rights are dependent on the type of stock that one has purchased.

There are two types of stock. They are Common Stock and Preferred Stock.

Common stock is the type of stock that a majority of the general public may hold. It gives the shareholder voting rights in corporate decisions. It also entitles the shareholder the right to his/her share of dividends.

Preferred Stock does not carry voting rights, but it entitles the shareholder to a certain amount of dividends before paying the common shareholders. Dividends are a portion of the profits made by a company which are distributed among the shareholders.

Stock trading refers to the buying and selling of shares. The stock exchange was established to facilitate this buying and selling of shares. The most common and preferred way of buying shares is through a broker. This broker may be a full service broker or a discount broker.

Shares can also be purchased from the company itself. This can be done through Direct Public Offerings. A direct public offering is an initial public offering in which the stock is purchased directly from the company, without the aid of brokers.

The procedure to sell stock is similar to that of buying stock. Generally an individual would choose to sell his stock when the value has risen. This would guarantee him a decent profit. However in some circumstances in order to avoid further loss, he may have to sell at a loss.

The price fluctuations of stocks are dependent on the supply and demand in the market. The number of individuals that wish to purchase stock is the demand. The number of shares that are available for sale at any moment is the supply.

The price of stock will rise when the number of prospective buyers is more than the number of sellers. Now that the price is high, investors will prefer to sell their shares to make a profit. The buyers will leave the market as the price is too high. This creates equilibrium between buyers and sellers.

Eventually the sellers will outnumber the buyers and the price will fall. More investors will then buy shares at this low price and equilibrium will be achieved between sellers and buyers. Thus it is the investors that determine the value of a share of a company.

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Classification Of Stocks For Better Investments

Saturday, October 9th, 2010

Many of us are familiar with the saying "what goes up must come down then." And 'well-known that the change in the stock market regularly. As these market fluctuations, it is important for investors to plan a strategy before you invest your hard earned money.

One of the ways that Stocks can be classified is on the basis of the type of business. Similar companies are grouped together for the purpose of comparison. These groupings can be called Sectors.

The Stock market can be classified into 11 different sectors. Two of these sectors are called defensive sectors and the other nine are called Cyclical sectors.

Defensive stocks represent those items and services for consumers and businesses that cannot be put off no matter what the state of the economy. These stocks remain stable even in an economic downturn. They include utilities and consumer staples like food, tobacco and oil. Even during hard times consumers still have need for food and energy, no matter what the price. Thus the value of the stock does not fall as drastically as other stocks.

However when the economy is expanding, the demand for utilities and consumer staples does not increase that drastically. Hence defensive stocks tend to lag behind in the market.

Cyclical stocks cover nine different sectors which are basic materials, capital goods, consumer cyclical, energy, finance, health care, technology, and transportation. These sectors are called cyclical because their value tends to move up and down depending on business cycles. The performance of these sectors is largely dependent on the economy.

Often, before an economic recovery, the share price of a cyclical growth. Share prices may even fall just before the slowdown begins. Thus, investment in cyclical stocks gives maximum benefit when investors buy shares just before the economy begins to turn upward.

The automobile industry is a good example of cyclical stocks. Consider the case of an individual that wants to buy a car. He will do so when the Market is in an upswing. This is because the individual would be more financially stable at that time. However when the economy is in a downturn, the individual would probably put off buying the car. This could be for a number of reasons that include layoffs or high interest rates.

It is important for an investor to keep a close eye on the current business cycle while creating his portfolio. He can have a mix of cyclical and defensive stocks. The cyclical stock will ensure that he gets good returns when the market is up. The defensive stock will ensure that his losses are minimized when the markets are down.

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The Role Of Online Trading Broker

Saturday, October 9th, 2010

Online commerce has grown at a tremendous pace in recent years. It has become increasingly popular because it is much more convenient than other options. However, the large number of investment opportunities certainly cause a lot of confusion for a new investor. This is where a broker comes in.

Just like clothing retailer is the link between the customer and the designer, so is the broker between the investor and the stock exchange.

This means that the role of a broker is that of a salesperson. A stock broker may work individually or for a stock brokerage house. His job profile is to carry out transactions for the investor. The broker may be paid by a brokerage house, through commissions on sales, or a mix of both.

There are two types of brokers, namely full service brokers and discount brokers. Full service brokers may offer a wide range of financial products along with investment advice. In return they charge high fees. They work on commissions.

Discount brokers will conduct all of your transactions for you without offering any advice. They are paid a fixed salary and make no commissions on executing your trades.

The first step is to choose a broker to choose between full service and discount brokers. Support for its own portfolio can be rewarding, but only if they are well informed. Share price is a very high risk, which depends on the market today. Without a thorough understanding of the market may fail miserably. Therefore, it is preferable to invest through a broker. A background check must be carried out in the room to ensure it is reliable.

Your broker will have sound knowledge of how the market functions. So he will spread out your investment over a number of different securities. There are certain risks involved for the broker as well.

Currently the Indian market is experiencing an economic slowdown. In such a situation most investments come along with high risk factors. But there are a number of safe investment options. It is important to note here that no investment can be considered to be completely safe.

Investing in metals is considered safe in a volatile market. Other instruments that provide a guaranteed income and deposits of postal savings, which also fall into this category. The main idea is to invest in securities that are less likely to be affected by the current market scenario.

The Securities and Exchange Board of India (SEBI) has set a number of Client-Broker guidelines. These ensure transparency and discipline in the dealings between the stockbroker and investors.

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Trading Basics

Saturday, September 18th, 2010

Trade online word always brings thoughts of a single image. It may be too complicated, or you can not always maintain control of the investment market. With technological advances and new ways to communicate every day, it is very easy to understand the concept of commerce.

Many would wonder if trading is really easy or tough, good or bad. All these questions prop up when we think about online trading. As the word trading would depict, it’s just asymmetric exchange of goods, service or money.

This kind of trading or barter system is an age-old method, which was adopted by people to exchange their services and goods. As man grew, new and advanced varieties of barter system were invented. Trading shares online is also a part of it.

With each growing step for mankind, investment has now become a hard reality than just a floating thought. Online trading is one of those investment ideas that would give one guaranteed returns, if invested in a wise and secure way.

Before attempting to trade online, it is imperative to understand all the terms involved. All terms and conditions shall be read and research the company are trying to invest in.

Once you have decided to go ahead with online trading. You would first need a demat account, also referred as dematerialized account. All companies have to offer securities in both physical and demat mode, the choice is always the trader’s. Though the preferable mode is always a demat mode, as it is more secure.

Demat account works just like your bank account. Only you have shares instead of money. Shares are held electronically in your account, and all the trade transactions show up just like the ones in your normal banking accounts.

Once this is established, you have to choose the company you wish to purchase the shares from. Start with researching about the company, their history. But in real world who has all this time. Say, if you have to research a company’s history for the past 3 years. One does not have time for that in this fast paced world.

There are many companies that do this instead and provide you an easy to understand report. Based on this report you can always trade safe and breathe. These companies act as a broker or depository participant, who allows you to trade on their behalf.

Armed with all the knowledge about a company, you can safely use as a platform for trade and profit in a shorter period. No need to be an expert in online trading in these platforms. With its system of risk management, including analyzing the amount you can invest safely.

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About The Bombay Stock Exchange

Friday, September 17th, 2010

Bombay Stock Exchange is the oldest exchange in Asia action. traces of BSE in 1850. During this period, four and a stockbroker Parsi Gujarati gathered under the banyan tree opposite the Town Hall in Mumbai. Dalal Street, the group proposed in 1874, this organization became known as "Native Share and Stock Brokers Association.

The scene of the BSE has changed since 1875 when around 300 people became members by paying Re.1 of the BSE. In the year 1956 this organization established the name Bombay Stock Exchange, and it became the first to be recognized by the Indian Government under the Securities Contracts Regulation Act. It developed the BSE Sensex in the year 1986. This gave BSE the means to measure overall performance.

BSE became an electronic trading system in 1995. In the 21st century the development of Sensex lead to expanding BSE’s trading platform. These were an automated, screen-based trading platform called Bombay Stock Exchange on-line trading or simply BOLT. The BSE had introduced the very first centralized exchange-based internet trading system.

BSE is one of the stock exchange which has the largest number of companies listed in the world. In February 2010, the market capital value of the companies listed on the BSE was around US $ 1.28 trillion. This made BSE the fourth largest stock exchange in Asia and the eleventh largest in the whole world.

BSE has a significant trading volume with over four thousand nine hundred companies listed. The BSE SENSEX is also known as the BSE 30. It is the most widely used market index in India and also in Asia. The National Stock Exchange of India accounts for most of the trading in shares in the country.

The 20th century has not been so good for the BSE. The decades before this, had no scale that could measure the ups and downs in the stock market. In the year 1986 Stock Index-SENSEX was introduced. This Index was considered as the barometer of the Indian stock market.

Bombay Stock Exchange has been awarded the Golden Peacock Global CSR Award in Corporate Social Responsibility. Out of many companies under the BSE, Reliance Money is amongst the largest broking house of financial products. This company has more than 3% of total stock market volume of BSE and NSE. Out of many other companies, Reliance Money has over 20 lakh customers, with over 10,000 branches in more than 5000 cities.

The latest technologies have made investments in the union of SA-file line at many companies. Web sites that allow customers to commit to investing and managing most of their services such as equity trading, trade in goods, investments, mutual funds, life insurance, money transfer and exchange.

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