How to match Trading Strategies with Option Trading Strategies

There are generally four different strategies employed by stock traders, each of which has implications when applied to options:

Position Trading
Traders buy a stock and hold it for long periods of time, based on good fundamentals of the company. They will often wait for a stock to reach really good value, and then watch for institutional or insider buying before making a move. As the stock price increases, they look out for other buyers to step in a move the price even further.
BUYING CALLS AND PUTS is NOT appropriate, because you pay large premiums for time value, most of which will be wiped out over time even as the stock gains in price. TIME DECAY is your enemy.
Selling COVERED CALLS each month in the option cycle on the stock you already own can significantly reduce the cost you paid for the stock in the first trade. Even if the stock goes down, you can still come out a winner!

Momentum or Trend trading

Once a stock has made clear move or breakout, the Momentum traders step in, and ride the stock up along a trend to its first major reversal. They hope to make shorter term profits from a rapid move in the price. Holding periods of six weeks to six months.
APPROPRIATE OPTION STRATEGY
BUYING CALLS AND PUTS is NOT appropriate, because you pay large premiums for time value, most of which will be wiped out over time even as the stock gains in price. TIME DECAY is your enemy with Momentum Trading.
SELLING CREDIT SPREADS is a good strategy, and in fact can be very profitable, because as you sell spreads on the opposite leg from the stock's direction of momentum, you can repeatedly buy back the spreads for minimum cost and sell another spread closer in. This is where my ACTIVE CREDIT SPREAD TRADING concept kicks in. While I average about 15-18% profit on a given stock each month, I have sometimes made 70% in a month as I ride the trend. Time Decay is your secret weapon for trading this strategy.
Selling Naked Puts is a good strategy, and can be even more profitable than selling credit spreads. However, it leaves you a position of possibly having to buy a lot of stock if the trade goes against you, and so your broker requires you to have a lot of margin.


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Gathering Trade History From Your Online Broker

There are many problems faced by active traders in calculating their capital gains and losses from their online broker’s trade history. Let me start by saying that...
Most brokers do not make it easy for their clients!There are absolutely no standards for trade history reporting from one broker to the next. This presents a real challenge for any trader who wants to analyze his or her trade history.
How does one get their trades into some sort of trade analysis software or spreadsheet? How can this be done for several different brokers?

What do they provide?

Some brokers provide simple trade history reports while others provide very complex statements or reports which have so much HTML formatting that it makes it virtually impossible for any one to copy and paste the information into a personal spreadsheet! Few provide a comma or tab delimited text file or Excel file download, and even these differ greatly in column formatting.
A few brokers have interfaces to personal finance software programs such as Quicken or MS Money or popular tax software programs such as TurboTax and TaxCut. But these programs were never designed to handle the volumes of trades made by the active trader, and most have serious limitations when it comes to properly matching these to IRS requirements.
And NONE of the above mentioned software programs calculate wash sales which is part of the IRS tax law and required for filing a proper schedule d.
Active traders need to analyze their profits and losses.
Trades must be imported and matched. Profits or losses must be accurately calculated and adjusted for wash sales. This needs to do be done simply and regularly if you are to ever get a handle on your trading gains and losses.
This may be the most overlooked problem facing active traders today.
There are many companies and individuals out there offering you trading systems that promise to be the real thing and that will teach you how to earn tons of money. But you must be aware that not all of them are sincere and you should be ready to look for some specific characteristics good forex trading systems must have.

1. They must be willing to let you know part or the basics of their system for free. It is a good sign if they have a free course or seminar describing their methodology so you can decide if it's for you before you give them any money.

2. They must have a no questions asked guarantee of your money back; if at the end they fail to deliver on their promises.

3. They should offer some forms of continuing support and education after you make your purchase. It is a very good sign if they provide an online/email forum so that their clients can interact with one another and the developer of the trading system. Another good sign would be if they have a support phone number where you can reach them at during regular business hours.

4. You should be able to make an appointment to talk on the phone with the developer of the system if you wish. If you're paying good money for the system then you should have the right to speak to the developer. If not, go somewhere else for your trading system needs

5. The trading system they offer you should be recession-proof and go beyond the traditional linear models that are based mostly on past results. Ideally, the forex trading system you get should allow you to go with the market direction, wherever it's going, instead of hoping and believing it will go one way or another, and then find out it was all wrong.

6. The system should be given to you with software that performs the complex math behind it making it simple for you to use at any time and without strange formulas.

7. They must enthusiastically listen to your concerns about trading, what you wish to accomplish and answer your questions to your satisfaction. If you suddenly feel they are in the business only for your money, then you better move on. You want to make sure that the people selling you a Forex trading system is actually interested in a mutually beneficial, long-term relationship with their clients

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Hedging with Currencies

Forex trading can be used as a hedge one of the great things about currencies is that they can be used as a hedge against other investments.

If you are concerned about the stock market, you can invest in currencies to help balance that worries out.
Additionally, you can use other investments to hedge against your forex trading positions. Investing in bonds can help you hedge your currency trading positions.
There are many opportunities right now in investing, but with market volatility, having a hedge can be a good thing.

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SBA Expands Emerging 200 Initiative to 15 Cities

WASHINGTON--(BUSINESS WIRE)--The U.S. Small Business Administration’s innovative Emerging 200 initiative will be expanded in the spring of 2009 to include five new cities –
Detroit; Dallas; Denver; Jacksonville, Fla.; and Portland, Ore. – SBA Acting Administrator Sandy K. Baruah announced today.

The announcement comes as 200 executives of inner-city small businesses in the first Emerging 200 class are graduating in 10 U.S. cities – Boston; Philadelphia; Baltimore; Memphis, Tenn.; Atlanta; Chicago; Milwaukee; Albuquerque, N.M.; New Orleans; and Des Moines, Iowa – over the next few weeks.
“We launched the Emerging 200 initiative to identify and support inner-city small businesses that have substantial potential for growth and provide them with high-level training, networking, and other resources necessary for success,” said Baruah. “By helping them prepare for the challenges of today’s economy, SBA is tapping into the power of local entrepreneurs to transform their communities, generate new jobs, and make real and lasting changes.”
Small business executives in the Emerging 200 initiative participate in an intensive and comprehensive program, draw from each other’s experiences and expertise, develop connections with local capital providers, and complete a growth plan by the end of the program.
“I cannot say enough about how valuable this class has been,” said Kelly Sargent, president of Brainstorm Marketing in Des Moines, Iowa. “This class has given me the knowledge, courage, and access to experts and 19 other CEOs who face the same challenges I do. I highly recommend e200 to any business owner regardless of the size of the company or longevity.”
The growth of small businesses in underserved market is a prime focus of the SBA. Increasingly, the delivery of SBA products and services to inner-city entrepreneurs has become a high priority for the agency and part of a long-term strategy to sustain and stimulate economic activity.

In October 2007, SBA commissioned the Initiative for a Competitive Inner-City (ICIC), led by Harvard Business School Professor Michael E. Porter, to identify the nation’s largest inner city areas (40,000+ inner city jobs) that have experienced flat or negative compound annual job growth rates in recent years.

Based on this study, SBA selected a representative cross-section of these cities to participate in the Emerging 200 based on the cities’ interest, demonstrated support from the local community, and capacity to the support the effort with SBA District office staff and in-kind support from resource partners. After identifying these inner city areas, SBA also collaborated with ICIC and its network of economic development researchers to establish criteria for the types of businesses that would benefit most from Emerging 200.
“Clearly, small businesses are the ones creating employment opportunities in inner city communities throughout our country,” said Jeffrey R. Andrade, associate administrator, Office of Entrepreneurial Development. “With the leadership of the Emerging 200, SBA is helping to build a sustainable network of dynamic growing companies in areas that have not experienced job growth for several years.”
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