Credit Card ’s Talk

Stock options are an excellent way to reduce risk in trading or to leverage your capital. While advanced stock option strategies are for experienced investors only, the basic option strategies can also be used by novice traders.

Basically an stock option is nothing complicated. There are just a few things to consider. There are two basic option types which are the call option and the put option.

The call (put) option gives you the right to buy (sell) a stock at a fixed price before a certain date, the expiration date. The option expires at this date and does no longer trade. Until this date your strategy should have worked out, otherwise your stock option expires worthless.

Buying the stock option is nothing else then buying the stock itself. Just that you need much less money to buy the option instead of the shares and that the option expires one day. But the rest is almost the same. When the stock moves, the option moves as well.

The difference and the big advantage of options is the leverage involved. To buy the option you need about 10% of the capital which would have been needed to buy the shares directly but with the same profit potential. There lies the risk as well.

One option contract equals 100 shares. If you want to own 1000 shares of Microsoft then you either can buy the 1000 shares at the stock exchange or you buy 10 Microsoft option contracts at the options exchange. You will figure out that there are many options for one stock. The reason is that options have different expiration dates and strike prices. The strike price is the price where you could buy the stock if you want.

In the praxis you don’t want to buy the shares through the options so this remains a theory. Most options are not exercised but sold before expiration with a profit or expire worthless otherwise. So the option is just a bet with limited investment. You can never loose more than your option purchase price with the basic option strategies.

There are various combinations of covered and uncovered call and put options. Different strike prices and expiration dates have different option prices, leverage and risks. To learn the basic option trading strategies you must first explore the possibilities of simple call and put options.

Instead of a short sale you could buy a put option. Instead of going long in shares you buy a number of call contracts. Following the option prices for several days will show you that the option price decreases slowly although the stock price hasn’t changed at all. This is the price you pay for the leverage.

David A. Sorenger is a stock market expert and provides detailed information on stock options trading at his web site http://www.StockTradingABC.com

Greed - The Ugly Duckling of Investing

Ah, yes, that evil five letter word can get one into a some hot water when it comes to investing in the stock market now can?t it? I?m sure we?ve all been there, at one time or another, where the evil has overcome and we think; hold on for a just a little bit longer and I can make even more money than I could if I sold right now. Greed can be defined as an excessive desire to acquire or possess more than what one needs or deserves, especially with respect to material wealth. Yes, that sounds just about right, certainly relates to stock market investing now doesn?t it?

Keeping Greed out of Your Investing

We all have our own investment strategies, I?m not here to tell you what works best and what sucks wind, but one thing I do know, if your investing strategy involves greed you will probably ?lose? more often than you ?win?. It?s certainly not always an easy thing, to keep greed out of your investments, especially when you?re in a stock that?s on a nice uphill ride. Any prudent investment approach should contain some form of an exit strategy, simply put how you plan on getting out of (selling) the stock you hold. This would be one way to avoid greed, have a set price at which you intend on selling the stock, walk away with the money in your pocket and move on to the next investment. Not always as easy as it sounds though is it? Prior to buying into a stock you should have some sort of idea at what price you would like to sell it, hopefully you don?t have to hold it for 10 years in order for it to reach that price. Sometimes you buy into it and if you timed it just right, you start to see the price go up sooner rather than later. When you start counting the dollars you are making seems to be when the exit strategy flies out the window and greed comes creeping in. I mean, gee, who knew when you bought it that the stock was going to rise so high, so fast, why sell now when you could make so much more money? It would be downright silly to get out now when you could clearly make much more cash if you held on to it. Somewhere deep within your being, there should be something rejecting this argument, and reminding you of your exit strategy and how you?ve gone past the price you told yourself you were going to be out of that stock and onto the next one.

Take your profits when you can

Discipline is a big factor when investing in the stock market. By employing some self-discipline you can keep your head about your initial investment strategy and keep greed from banging down the door. If the stock you invested in has made a nice move, and you have made the money you hoped to make off of it, then get out of it while the getting is good. If it seems as though the price is going to continue to increase, then why not take out your original investment plus a small profit (if possible) and leave the rest. At least you wouldn?t be losing any money by taking your profits when they are presented to you. You could have the best of both worlds if you chose to employ this strategy, you made your money (or at least didn?t lose any) and if the stock goes to the moon you?ll be laughing all the way to the bank, or at least to your next investment. The other option, let greed take the wheel, you could make way more money if you don?t take any profits and let the whole thing ride up the hill. Sure, you could stand to make a lot more off of your investments and I?m sure many people do, but the problem with this approach, where is the top? And when it reaches the top is it going to stay there for a while or come crashing down at record speed? What if it reaches this peak while you?re on vacation, or sick and can?t get to your computer to make the all important trade? It?s amazing how fast all those profits can disappear and you are no further ahead then when you first invested in the stock.

The main point to all this? Greed has a home and a mother, just like the ugly duckling, just perhaps not in stock market investing. Obviously, investment strategies vary from person to person, and if you find one that works, and greed is a big factor, well, kudos to you, personally, I?ve never gained off my greediness, it?s always hurt me more than helped me. Anyways, now back to my point. No one can predict with 100% certainty (no one I?ve ever heard of anyways) what is going to happen with a particular stock or the stock market in general. If you are able to keep your head about your investments and keep greed out, you could stand to make some tidy profits so that you can keep investing, employing your investment strategy and hopefully making some decent money at the whole thing.

*Any information contained in this article should not be construed as investment advice, simply the thoughts and opinions of the author.*

Jennifer Mycock & Branden Moskwa of Tradeopolis.com

Tradeopolis.com, your stock market trading and stock investing resource, with access to articles on Stock market trading and stock investing. Penny stocks to mutual fund investing, tips and secrets and all the latest hot press releases.

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Investing in penny stocks provides traders with the opportunity to dramatically increase their profits, however, it also provides an equal opportunity to lose your trading capital quickly. These 5 tips will help you lower the risk of one of the riskiest investment vehicles.

1. Penny Stocks are a penny for a reason.

While we all dream about investing in the next Microsoft or the next Home Depot, the truth is, the odds of you finding that once in a decade success story are slim. These companies are either starting out and purchased a shell company because it was cheaper than an IPO, or they simply do not have a business plan compelling enough to justify investment banker’s money for an IPO. This doesn’t make them a bad investment, but it should make you be realistic about the kind of company that you are investing in.

2. Trading Volumes

Look for a consistent high volume of shares being traded. Looking at the average volume can be misleading. If ABC trades 1 million shares today, and doesn’t trade for the rest of the week, the daily average will appear to be 200 000 shares. In order to get in and out at an acceptable rate of return, you need consistent volume. Also look at the number of trades per day. Is it 1 insider selling or buying? Liquidity should be the first thing to look at. If there is no volume, you will end up holding dead money, where the only way of selling shares is to dump at the bid, which will put more selling pressure, resulting in an even lower sell price.

3. Does the company know how to make a profit?

While its not unusual to see a start up company run at a loss, its important to look at why they are losing money. Is it manageable? Will they have to seek further financing (resulting in dilution of your shares) or will they have to seek a joint partnership that favors the other company?

If your company knows how to make a profit, the company can use that money to grow their business, which increases shareholder value. You have to do some research to find these companies, but when you do, you lower the risk of a loss of your capital, and increase the odds of a much higher return.

4. Have an entry and exit plan - and stick to it.

Penny stocks are volitile. They will quickly move up, and move down just as quickly. Remember, if you buy a stock at $0.10 and sell it at $0.12, that represents a 20% return on your investment. A 2 cent decline leaves you with a 20% loss. Many stocks trade in this range on a daily basis. If your investment capital is $10 000, a 20% loss is a $2000 loss. Do this 5 times and you’re out of money. Keep your stops close. If you get stopped out, move on to the next opportunity. The market is telling you something, and whether you want to admit it or not, its usually best to listen.

If your plan was to sell at $0.12 and it jumps to $0.13, either take the 30% gain, or better still, place your stop at $0.12. Lock in your profits while not capping the upside potential.

5. How did you find out about the stock?

Most people find out about penny stocks through a mailing list. There are many excellent penny stock newsletters, however, there are just as many who are pumping and dumping. They, along with insiders, will load up on shares, then begin to pump the company to unsuspecting newsletter subscribers. These subscribers buy while insiders are selling. Guess who wins here.

Not all newsletters are bad. Having worked in the industry for the last 8 years, I have seen my share of unscrupulous companies and promoters. Some are paid in shares, sometimes in restricted shares (an agreement whereby the shares cannot be sold for a predetermined period of time), others in cash.

How to spot the good companies from the bad? Simply subscribe, and track the investments. Was there a legitimate opportunity to make money? Do they have a track record of providing subscribers with great opportunities? You’ll start to notice quickly if you have subscribed to a good newsletter or not.

One other tip I would offer to you is not to invest more than 20% of your overall portfolio in penny stocks. You are investing to make money and preserve capital to fight another battle. If you put too much of your capital at risk, you increase the odds of losing your capital. If that 20% grows, you’ll have more than enough money to make a healthy rate of return. Penny stocks are risky to begin with, why put your money more at risk?

http://www.1source4stocks.com>Trading Penny Stocks investment strategies for penny stocks
1source4stocks.com provides penny stock traders with online trading and investment tips, online trading strategies and penny stock picks.

The stock market is either a physical or virtual location where buyers and sellers can meet and exchange or trade company shares. If you buy a stock then you become a partial owner of the company. If the company is doing well and makes money, then you make money as well. The stock price will increase. If the company isn’t successful then the stock price will go down and you loose money.

Investing in stocks is a very convenient way to become an entrepreneur. In exchange to your purchase price you get a portion of a company and its profits and dividends. You have a voting right which you can use in the stockholder’s meeting. The advantage for the company is receiving the money from the stock sales. This is one of the best ways for a company to raise money for its business.

In the United States there are several different stock exchanges. The best known one is the so called ?Wall Street? or New York Stock Exchange (NYSE). The NYSE is a physical marketplace. That means that all orders to buy or sell stocks are directed to a person who then matches these orders for an execution. These persons are called specialists and each specialist is responsible for a specific stock or company.

The second best known stock exchange is the NASDAQ. The NASDAQ is a virtual market place, that means there are no specialists but only market makers and electronic communication networks. All orders are matched 100% electronically. The NASDAQ is the playing field of the so called day traders who sometimes make hundreds of buys and sells during the day. Because all executions are electronic and therefore extremely quick, it’s possible to buy and sell stocks within seconds.

It’s this technology which has allowed the stock market to grow tremendously the last years. Today everyone with a simple computer and an Internet connection can trade stocks or other instruments like futures or options online with low transaction costs. In earlier days trading stocks was the privilege of a few people only because it was very expensive. The stock market was in the hands of banks, investment funds, insurance companies and wealthy private investors only.

Today you still can’t purchase or sell stocks directly at the exchange yourself but you won’t want to do it anyway. You always have to go through a registered broker who takes your orders and transmits them to the exchange for execution. The broker takes all the hassles away so that you can trade stocks without having to think how your order gets executed properly. Full service brokers offer a wide range of services. You can get investment advice, research data, news and quotes and personal assistance. This includes a higher transaction cost. Experience traders who don’t want or need these services and do their own research can use discount brokers who just execute your orders for a lower fee.

You can make much money with stocks when you have chosen to invest into the right company at the right moment. The timing is very important and can make the difference between profit and loss. Be aware that the stock prices are always in fluctuation because supply and demand determines the current stock quote.

David A. Sorenger is a stock market expert and provides detailed information on the stock exchange at his web site http://www.StockTradingABC.com.

When trading penny stocks, once you’ve had a big success, your first thought me be about cashing out in order to enjoy the fruits of your investment. Keep in mind however that taking all the money off the table in the middle of a good deal (such as buying a house or car) may not the best course of action. Of course these are the things you are hoping to buy with your earnings and if you let all of your money ride you risk loosing it all if the stock dives. So what’s an investor to do?

Savvy investors have developed a rather solid strategy of selling a portion (typically half once the stock has increased in value by 100%). This leaves you with the benefit of potential future increases while protecting the value of your initial investment.

If you’ve found another investment that you’re interested in you could take a one third approach. This means leaving one third where it is, cashing out a third, and investing a third in the other stock you are interested in. While each situation is different the method is solid and used by many successful investors, particularly those who invest in the volatile market of penny stocks.

While one big win often leaves you hungry for the taste of another, it may be a good idea to take some time off after a successful trade and before putting your gains back into the market. It is always better to be ruled by reason than emotion, particularly when dealing with money. Investing should be done with reason and rather boring instead of made as the result of emotions and a need for adrenaline.

Vegas has a term for players who are much more risky with their winnings than they tend to be with their own money. It’s called ?playing with house money?. The reasoning on the part of the players is that this money wasn’t their money to begin with and it’s no big loss. These players are also often less upset once they’ve lost it all.

This mentality often takes over with stock market investing. Rather than seeing that money as theirs, investors see it as house money they can play with and are willing to take investments that they would have otherwise passed on in hopes of another big win. Rather than relying on the pain staking hours of research and agonizing over the decision to purchase for your last win, you invest foolishly and loose it all. Taking a little time in between investments is often a good strategy for keeping your head in the game and money in your pocket.

Cashing out after a big rush on a stock is also a good idea. Especially if you are confident in the potential of that stock, this allows you to sell your stock then buy back after the initial rush when prices have gone down. Most of the time you can buy it for far less than you sold it.

There’s only one thing that is worse than selling too early when investing in stocks and that is selling too late. Do not try to pick the absolute top and sell at that price. It is much better to sell on the way up, than on the way down and it is nearly impossible to predict at exactly which point stocks will peak. Have a cut off point, once you’ve reached that point and made an acceptable profit, then it’s time to sell. Don’t look back at what you didn’t make either, be content with you much you’ve made and move on to the next stock. If you begin obsessing over every penny you could have made, perhaps this is not the best investment option for you. If you can walk away clean you can enjoy the exhilaration of the greatest game on earth.

Interested in buying penny stocks? Find out the best way to invest in penny stocks to avoid losing your money. VIsit http://www.1source4stocks.com

Will consumers favor a non-burning pain relief product, like Swiss Medica?s (OTC BB: SWME) O24 instead of Icy Hot or Ben Gay? Richard Weise, inventor of the patented O24 pain relief product talked to us about how O24 came about, how it works differently than other pain relief products and why O24 might just become a success story during its North American rollout to retail stores.

Interviewer: How did you come about developing the O24 pain relief formula?

Richard Weise: I started the O24 development thirty-five years ago, with studies in natural medicine. When you have chronic pain, people want to take some pharmaceutical product, which gives side effects. I don?t like that. I was studying to get a product that I could use, which would have no side effects. Previously while I worked in Germany, I developed environmentally safe cleaning products. I had studied Chinese medicine. I studied all the medicines for years: natural medicines, Indian medicines, European medicines and all the herbs. The Europeans, over a longer time, have been using more natural products.

Interviewer: How did this product advance from your studying medicines to its commercial distribution?

Richard Weise: I had this product in Europe and used it for myself, but it was not for commercial use. I tested it on myself. In the United States my first testing was on my English teacher. She broke her foot and had pain. I told her I had something for her pain, and I put it on her foot. She stopped having pain. She called me the next morning and told me that after six weeks, this was the first night she could sleep pain-free. A couple of months later, she came back to me and said, ?Richard, I need two hundred bottles of this stuff you gave me.? I wanted to know why she needed two hundred bottles. I had offered to make her some product if she needed more, but two hundred bottles? She told me she had so many people she had given them a little of the formula to, people were asking her for more. That?s how this whole thing started in 1992 in the United States. Where it started commercially.

Interviewer: How was your reception, at first, with O24?

Richard Weise: When I first started with this, in the United States, people thought it was ?snake oil?. I?m not a medical doctor. I studied natural medicine as my hobby. I don?t make claims. The claim I am permitted to make is that this product can be used for temporary pain relief for aches and pains, muscle spasms, arthritis. The FDA told us this in 1995. Before that, it was considered snake oil. I have customers who have been using this product for thirteen years. They are using it and they are happy. They will not use anything else.

Interviewer: Why doesn?t O24 give people the burning sensation one suffers from most other pain relief lotions, sprays or gels?

Richard Weise: Let?s take Ben Gay?. It uses menthol and capsaicin. Capsaicin is very heating. It is made out of (chile) peppers. When you use too much, you can burn your skin. They put menthol in to equalize the temperature a little, but it?s still burning. When you work out, and you put this on, your skin gets red. Tiger Balm? is a product made of camphor and menthol. Menthol gives a cooling feeling. When you have inflammation of your nerve, sometimes it helps and sometimes it doesn?t. It?s only cooling.

Interviewer: Why is it that O24 works differently from other pain relief lotions, gels or rubs?

Richard Weise: When you have pain in an area of you body, the temperature of the pain area is different than your regular body temperature. It can be higher by a half a degree or it can be lower. Some people put ice on, and it will not help. Others put ice on and it helps. The reason is if the temperature was too high, putting ice on it cools it down to the regular body temperature. The inflammation of the nerve is gone (by putting on ice) and the pain goes away. The O24 equalizes the body temperature, whether it is higher or lower. Automatically, this was a wonderful side effect.

Interviewer: Is that one of the major differences, between O24 and the others? That O24 doesn?t burn?

Richard Weise: Yes. That was done on purpose. With other products, people complained they burned. Some essential oils are very skin irritating. Therefore, you have to make the right formulation to make sure you have no complaints. I still try to make the product better and better, more efficient for the patients, for the consumer. I haven?t had any complaints. I have a complaint file and it has been empty for the last thirteen years, except one person who was allergic to peppermint oil.

Interviewer: Do people use this product on its own, or in conjunction with something else, like ibuprofen?

Richard Weise: People, who have been using this product for ten years, use just this product and nothing else. A lot of people over-medicate for their chronic pain. In some cases, O24 replaces the use of pharmaceutical products altogether. Some of the arthritis patients use it three to four times a day. Others use it once per day. It?s purely a topical lotion. It stays on top of the skin. You can not replace oral medication with this product.

Interviewer: Do you get every ingredient from the same suppliers, or do you change your suppliers from time to time?

Richard Weise: We pretty much try to keep it with the same suppliers. We quality control every ingredient. We make an adjustment every time we do a batch. After every batch we have to go to an independent lab for testing to prove that every ingredient we say and claim in the product is exactly what is in O24. Right now, we?re making a batch for 1600 pounds. That translates into 25,000 one-ounce bottles.

Interviewer: The big puzzle seems to be how the herb essences stick together without binders, such as alcohol or glycerine or some other additive. How did you get the herb essences to bind?

Richard Weise: It is because of the way I mix the product together. That is the patent: how I mix them together and why they stay together. Over the past ten years, I saw companies try to copy the product. They bought product. They broke it down. This is easy. It?s not a big secret. They made the product, but every time they were finished, they concluded, ?This could not work!? They got nothing out of it.

Interviewer: Why does your O24 work, while the O24 copycats have failed to replicate your formula, if the ingredients are the same?

Richard Weise: They don?t know how to put the product together. There are no preservatives in the product. Normally, you put water or alcohol in the product and it stays together. O24 stays together without any binders. I put every essential oil into four groups. I have everything written down. The manufacturer knows my exact procedure. The results can be replicated without my monitoring the combining. The company (Swiss Medica) has all the paperwork (for the formula), and their chemists can replicate the formula. They can make the product in the same way. I have bottles sitting here that are thirteen years old. If I take them to the lab tomorrow, they have the same efficiency, the same main ingredients as the product I make today.

Interviewer: O24 has an indefinite shelf life?

Richard Weise: Yes. The same batch I made thirteen years ago has the same life as the batch I would make today. Actually according to the law, I can not say they have indefinite shelf life. We did a test for thirty-six months. We did a shelf-life test in an independent lab. They proved this product has a shelf life of thirty-six months.

Interviewer: Can you confirm that athletes and celebrities have actually used this product?

Richard Weise: Yes. I talked on the phone with them. I know Filip Gartner, the former head coach of the Norwegian ski team. I met him three or four times. Sam Walton?s daughter, for example, likes the product.

Interviewer: What do you know about the fibromyalgia testing that was done in Germany, using O24?

Richard Weise: The doctor bought the product from us. We had no idea he was doing the test. He bought product off the market, tested it and published the results in medical journals. He published this product and the test results. He published what he did without our knowledge and the results were excellent.

James Finch contributes to StockInterview.com and other publications. His archived articles and interviews can be found at http://www.stockinterview.com You can contact James Finch by email: jfinch@stockinterview.com.