SPECIAL REPORT Mark Skousen

Special Report Mark Skousen-PDF Download

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IMPORTANT NOTE This special report is for information and educational purposes only If you have. never traded options please do not buy or sell any contracts without first speaking with your broker or a. licensed professional For the latest options recommendations please see any of Dr Mark Skousen s. trading services High Income Alert Hedge Fund Trader or Fast Money Alert. The Little Black Book of Options Secrets Your Guide to Triple Digit Profits with Options. Copyright 2015 by Mark Skousen All rights reserved. No quotes or copying permitted without written consent. Published by,Eagle Publishing Inc,300 New Jersey Ave NW 500. Washington DC 20001,800 211 7661,Email CustomerService MarkSkousen com. Website www MarkSkousen com,The Little Black Book of. Options Secrets, First let me congratulate you on your desire to learn more about one of the most powerful. investment vehicles in the markets Second I would like to welcome you to the wonderful. world of options trading, Ever hear of the formula RISK REWARD Well that comes into play when you think of.
options Options offer a way to earn large profits but they also come with increased risk. compared to traditional stock investing, Indeed the buying and selling of options can be used to turbo charge your portfolio by. earning tremendous profits,How Do Options Work, By definition options are a contract giving the buyer the right but not the obligation to buy. or sell an underlying asset at a specific price on or before a certain date An option just like. a stock or bond is a security It is also a binding contract with strictly defined terms and. properties, Buying an options contract gives you control of a block of 100 shares of a particular stock. An option also grants you the right but not the obligation to purchase the related shares in. that stock at a pre determined price within a certain period of time This period of time. concludes with an expiration date I typically like to buy call options that have a life cycle of. at least several months in order to allow enough time for the call options to rise in value. sufficiently to sell at a nice profit before they expire. Why Buy Options, What is the benefit to buying an option instead of just buying the stock outright Well for. one options tend to be far cheaper than their related stocks As a result you can buy. options with comparatively little investment capital to leverage your money in search of. heightened profits And your investment risk is fully disclosed up front You can never lose. more than you spent on an options contract However the profit potential with options is. virtually limitless Even a tiny move in the underlying stock can yield a tremendous jump in. the value of an option,Let me illustrate this for you with an example.
Specifically I once advised subscribers to pick up June 30 call options on Spectra Energy. for 60 cents per contract At the time Spectra s stock was selling for around 28 so we. were looking for it to rise by at least 30 by June By late April Spectra Energy was selling. for over 30 and a 14 increase in the stock price yielded a 183 profit on the options. This is the amazing profit power of options trading. Generally speaking there are two types of options calls and puts You would buy a call. option when you think the price of a stock is destined to go up And you would buy a put. option if you think the price of a stock will go down Both are equally powerful and. profitable given the right set of circumstances,What Does an Option Recommendation Look Like. An option is defined by five main components,1 The ticker symbol. 2 The expiration month,3 The strike price,4 Whether it s a call or a put. 5 The premium paid to buy the option, So an option recommendation might look something like this. Buy the December 25 50 Calls for 2 75 in XYZ Corporation. This is a completely theoretical recommendation But let s examine what each component. means and how it would impact your investment if this was an actual recommendation. A ticker symbol is quite simply a short hand description featuring a unique combination of. letters to help investors identify a specific publicly traded company. The expiration month is just what you would expect It indicates the month in which an. option expires If the month when the option becomes invalid or expires is reported. without including a particular year you can assume that the option expires in the current. year All stock options end their useful life on the Saturday after the third Friday of their. expiration month I ll provide further explanation about expiration dates elsewhere in this. The strike price of an option is the price that signifies the investment is in the money and. able to help you turn a profit I watch for the stock price of a related option to rise to and. especially above its strike price When a given stock rises well beyond the strike price in a. call option the investor can sell the option at a handsome profit I will alert you to such. opportunities through my trading services, For example if company XYZ traded at 20 a share but I think there s a good chance the.
stock price will reach at least 25 50 per share by the Saturday after the third Friday in. October when the related option expires I might recommend that you buy call options in. the stock that have a strike price of 25 50 Of course I ll want the stock price to soar above. the strike price to enhance the value of the call options As the related stock price jumps so. does the value of the options, As I previously stated I almost always recommend call options rather than put options. Call options are bullish investments that are aimed at achieving heightened gains if the. price of the underlying stock rises which is why I recommend the stock in the first place. Finally I want you to understand that the premium is the price that you pay to buy an. option The price of an option typically is written in as a per share value In the case of. our example featuring the hypothetical company XYZ each contract that you buy applies to. 100 shares So if the price of the option is listed as 2 75 then your total premium or the. price you pay for the right but not the obligation to exercise the option would be 275. per contract, So let s recap the basic terms that we ve just covered. Let s say company XYZ Company has been trading steadily around the 20 mark But my. research and indicators lead me to project that XYZ Company was about to sign a huge deal. or launch a breakthrough new product before December Based on this information I am. ready to recommend the stock and the coordinating December call options with a strike. price that I feel the company is likely to reach With this information in hand I might issue a. recommendation to buy XYZ Company December 25 50 Calls for 2 75. At this point you would need to tell your broker the information that you would receive in. your alert to place your order You would tell your broker in plain English that you want to. purchase the XYZ Company December 25 50 Calls for 2 75 and indicate how many. contracts that you would like to purchase Then you would follow the stock s price and the. options to wait for the rise,Understanding How Options Work. As I already mentioned each options contract grants you control of 100 shares of a. particular stock And the price you pay for an option is called the premium The premium is. determined by a combination of two factors an option s intrinsic and extrinsic value. The intrinsic value is based directly upon the price of the underlying stock An option can. be in the money out of the money or at the money, I typically recommend low priced call options that are out of the money to maximize your. potential return The reason for this is that you want the stock price to be below the strike. price when you buy into the call option and then you want it to rise above the strike price. so that it is in the money and you can collect your profits. The further out of the money your call option is the cheaper the premium will be that you. pay to buy it But a key goal is to buy an option inexpensively while it s out of the money. and have it move into the money within our forecasted time frame before expiration As I. explained in my introduction this approach is the one that I use. When the stock price matches the strike price the option is considered at the money If the. strike price is below the current share price the option is in the money and an investor will. need to pay a heightened premium to buy it However when you are looking to buy any. particular option play you would want to purchase an out of the money option. Ultimately the goal is for the stock price to rise well above a strike price so that the related. call options will climb in value So after you have purchased the options you want them to. rise to become in the money so that you can make money on the investment. The extrinsic value is a much bigger variable in an option s premium A complex formula is. used to determine the extrinsic value of an option That formula includes the expiration. date and the perceived volatility of the option Volatility generates value in an option. Consider the hypothetical XYZ Company once again In our example I predicted that the. stock price would go from 20 a share to top 25 50 by December of this year Assuming. that we bought the option in October only two months exist for those shares to exceed. 25 50 an increase of more than 27 5 Since the chances of a move in that direction. might seem unlikely in such a short period of time the price of the premium that would be. required to pay for the options most likely would be low. If I predicted that the share price wouldn t top 25 50 until the following December an. additional 12 months away the likelihood of the stock reaching the strike price would be. much greater, Therefore the premium required to buy it almost certainly would be higher.
Of course volatility is another factor that affects the price of an option Let s say the share. price of XYZ was 10 in August 15 in September and 20 in October It seems far more. likely to hit 25 50 in the next two months raising the premium of the option. Supply and demand also are factors As the share price gets closer to our strike price more. people will want to buy that option driving up its price even further. How Do We Make Money with Options, Now that you have a general understanding of what options are and how they work I want. to explain how you can trade them in pursuit of tremendous profits That is why you re. reading this report right, And you ll be happy to know there are several ways we can use options to make money a. lot of money The traditional way to make money in the stock market is to simply buy a. stock at a low price and sell at a higher one, Let s look at company XYZ one more time If you bought 100 shares at 20 per share in. October and the stock reached 30 per share in December you might opt to lock in the gain. by selling, The simple math shows that you notched a 50 profit In other words 100 shares would. have cost you 2 000 without factoring in the commission for the trade When the stock. jumped to 30 the investment totaled 3 000 a 1 000 profit before subtracting the. commission for the trade Not bad for two months work. However let me now explain a way that we can make much bigger money by investing in. options I have used this method successfully to help my readers land profits of 330. 304 and even 333 with comparatively small movements in the underlying stock price. You see an option grants you the right but not the obligation to buy the underlying stock. Selling the option contract itself can be highly profitable. Here s an example my subscribers once bought OLN Olin Corp August 17 50 calls for. 0 25 or 25 per contract, At the time Olin Corp s stock was trading for 9 56 per share but I felt confident that it.
would top 17 50 on or before August, If you d simply bought the stock at 9 56 and sold it a little more than one month later on. April 20 for 15 you d have made a 57 profit And that is an excellent return by any. standard But investors could ve earned far higher profits with the call option. On March 23 just 13 days after buying the options the stock price had risen to 14 65 a. 53 gain and subscribers who sold half of their contracts for 0 90 netted an amazing. 260 profit, But wait Just 16 days after that on April 8 when the stock price had risen to 15 47 a. 62 gain subscribers could ve sold the other half for 1 25 That s a 400 profit with that. trade That equates to 330 average gains on the options trade with only a 57 increase. in the stock price Now that s leverage for you, See how powerful investing with options can be Even if I was wrong the most anyone. could have lost from buying the Olin call options was 25 per contract or their original. investment,Let s look at another real life example. I recommended that subscribers buy RAI Reynolds American Inc February 55 calls for. 0 30 or 30 per contract, The stock was trading for 48 39 at the time But I projected that it would be on a steady.
rise and I felt confident that we might see the price top 55 by February. I am glad to tell you the price of the stock and the options jumped In a little more than one. month the price of the contracts for those options leapt from 0 30 to 1 25. SPECIAL REPORT For Skousen Investor High Income Alert Hedge Fund Trader or Fast Money Alert The Little Black Book of Options Secrets First

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