| It's true - you can own your favorite stocks at no cost | | | | price is greater than or equal to $50, or it is less than |
| or at deepest discounts! Learn the highly guarded, | | | | $50. Let's evaluate both scenarios. |
| secret Option trading strategies professional investors | | | | Scenario 1: The stock trades at $50 or above: in this |
| use to make steady profits, year after year, no matter | | | | case the Put Option will expire worthless and you get |
| what the financial markets do. This article will show | | | | to keep the $400 that you received earlier. You can |
| you the step-by-step process of using Options to get | | | | now repeat the strategy month after month. When |
| the stock you want at a deep discount, and | | | | carefully executed, you would have earned around |
| sometimes at zero cost. Since trades don't always go | | | | $7,200 in 18 months without ever paying a dime and |
| the way we planned, so we will also explore the worst | | | | without even owning the stock. |
| case scenario. | | | | Let's assume the share price for the stock has gone |
| Properly executed, these strategies have the | | | | up 41% to $72 over the course of those 18 months. If |
| advantage of minimal expenses - something everyone | | | | you now purchase the 100 shares of XYZ Corp., the |
| can appreciate during these troubled times. The | | | | cost of ownership to you is ZERO, as you would have |
| following example will demonstrate how this is done. | | | | offset the $7,200 required for that purchase by your |
| 1. Do your fundamental analysis as you would do for | | | | strategy earnings. You are now the proud owner of |
| any stock that you would like to buy and hold for | | | | 100 shares XYZ Corp. at no cost to you. |
| long-term appreciation. Look for companies with strong | | | | Scenario 2: The stock trades below $50, say at $48 |
| financials and superior performance within their industry | | | | (a drop of 11% from $54). In this case the August Put |
| segment. Perhaps you've wanted to own the stock of | | | | Options will be In-The-Money (ITM) and now you need |
| a certain company for some time, but were not willing | | | | to buy 100 shares of XYZ Corp. at the strike price of |
| to pay the price. | | | | $50. But here is the best part: You get to keep the |
| 2. For those stocks, analyze Out-of-The-Money (OTM) | | | | $400 that you earned earlier selling the Put Option. |
| Put Options with expiration dates between 30 to 60 | | | | Your effective cost for this trade is $4,600 after |
| days. An OTM Put Option is a Put Option with a strike | | | | adjusting for $400. |
| price lesser than the current market price of the | | | | Compare this with someone who bought 100 shares |
| underlying stock. We are looking for a Put Option with | | | | at $54. Share traders ended up with a loss of $600 |
| high premium which we can sell. | | | | while you had a modest profit of $200 instead. Well |
| 3. Sell the Put Option. Your trading account will get | | | | not as good as Scenario 1, but not bad either! |
| credited with the put premium amount. Example: XYZ | | | | The strategy acts like a low-cost replacement for |
| Corp. (a fictitious name used for this example) stock | | | | actual stock ownership, BUT you must be prepared to |
| has a current market price of $54 on July 1, 2009. | | | | take ownership of the shares under Scenario 2 |
| August 2009 Put 50 is having a premium of $4. You | | | | circumstances. Keep in mind that this is a long-term |
| sell 1 contract (100 shares) of August 2009 Put 50 to | | | | strategy. |
| get a Credit of $400. If you had bought 100 shares | | | | There are many different ways to construct these |
| then you had to pay $5,400 but now you are | | | | strategies - conservatively or aggressively. Just like |
| controlling the same number of shares and getting paid | | | | regular investing, different people have different levels |
| $400 for doing that! | | | | of risk tolerance. If you want higher profits, you'll have |
| Technical Tip: The seller of a Put Option is obligating | | | | to be willing to take higher risks. |
| himself to buy the stock at the striking price. For | | | | At TradeGreeks we avoid high risks that MIGHT hit |
| assuming this obligation, he receives the Put Option | | | | the big jackpot. Our focus is on conservative |
| premium. For the more technical readers we have | | | | strategies with medium to long-term consistent, |
| provided an in-depth article link at the bottom of this | | | | predictable returns. This will ensure great profits that |
| article. | | | | beat anything else you might try in this market - |
| On August 21, 2009, the day your August Put Option | | | | sometimes well over 100% per annum. What's even |
| expires, two scenarios are possible: Either the stock | | | | more important: Our strategies ensure peace of mind! |