Posted on MSN Money @ http://money.msn.com/how-to-invest/article.aspx?post=a478d072-8929-4a30-aa70-11d3722e1575
If you’ve been in the market over the last year, you’ve dealt with global uncertainty, European debt crisis, hard landing vs. a short landing in China and an U.S. presidential election. The market hates that evil word…uncertainty! It’s been an uphill battle even with the S&P 500 posting gains of 13% in 2012. For the retail trader, it’s been a tough market to pick stocks when the 2012 darling, Apple (AAPL +0.14%), took a brutal end-of-year sell-off.
When the standard fundamentals and technical are overrun by sentiment, we have a market like we did last year. Choppy intra-day, and quarterly movements of stocks that have created a difficult market to trade individual, fundamentally sound equities. Let me suggest three ways to potentially improve trading for the small guy…
Look longer term. It may be tough to justify short-term losses for future gains. To be nimble is very hard due to the lack of ability and resources to correctly guess a direction for any period of time. When an investor can step back and purchase fundamentally sound companies at a cheap price, they are usually rewarded longer-term.
Make up some of the downward movement. Basic protective put or in-the-money covered call strategies are great ways to create returns as stocks move to the downside. The protective put acts as insurance on a stock position. You buy to open the right to sell your stock at a certain price for a certain period of time. The put position can make up significant amounts of the downside movement.
Insurance on equity positions gives your portfolio a hedge against the covered call strategy and helps investors receive a credit as they wait for equity positions to come back. An investor can sell to open a call and receive a credit into their accounts. They are now obligated to sell their stock at a certain price for a certain period of time. As a stock falls in value, the investor gets to keep the credit as the option expire.
Stick with what you know. If you are familiar with Apple (AAPL +0.14%) and the price movement, use your knowledge to your advantage. I would challenge anyone to find a better fundamentally sound company than Apple (AAPL +0.14%). Use the option strategies to make up some of the downward movement. When the next big thing comes out from Apple (AAPL +0.14%), you could be rewarded with another huge run-up.
Success comes when the account is closed, not on an individual trade basis. We all can get a big win or suffer some losses. Use the protective put and covered call to get paid when stocks suffer downside movements to lower you cost basis.
Disclosure: I am long Apple (AAPL +0.14%) shares.
Kevin Hurley
OptionsANIMAL Instructor
19 comments
Everyone that’s elsewhere there helping and for the relaxing who are manufacture it potential for them to be present.
Yes, very useful article, I’ve seen an example of dynamic SEO by a friend of mine that use similar scripts in a announces’ site.
Great technique and one I need to get going for my websites.
I must say, you’ve got one of the best blogs I’ve seen in a long time. What I wouldn’t give to be able to create a blog that’s as interesting as this. I guess Ill just have to keep reading yours and hope that one day I can write on a subject with as much knowledge as you’ve got on this one! Just visit our branded firm @ Sonictrades.com
Incredible ideas on this website. It’s unusual nowadays to find web sites with information you are searching for. I have read most of them and got a lot from them. To me, you are doing the great.
Very nice post. I really enjoy the reading .Thank you for this excellent details.
So great work, its really so informative and helpful tips. thanks for sharing.
Moving To Europe || Interstate Removalists in Sydney
Really this site so helpful and knowledgeable for getting trading market knowledge.
SEO Service In Sydney | SEO Company In Sydney
very nice post, i certainly love this website, keep on it
Great blog. All posts have something to learn. Your work is very good and i appreciate you and hopping for some more informative posts.
I think that these are the best tips to deal with market. Actually this is the first requisite before someone starts any business. Anyways great post. Thanks for sharing.
Fridge Repair Toronto
good post, I think a lot of people need articles like this
Very nice blog on this website. It is really difficult to get this kind of with useful information. I am relieved I came upon this site. I will eagerly look forward to your upcoming updates.
Whoever is detected in a shameful fraud is ever after not believed even if they speak the truth.
If you’re an employer, you want to hire an employee who’ll do their job, not do your bidding.
His neigh is like the bidding of a monarch, and his countenance enforces homage.
We realize how upsetting and unexpected experiencing water damage can be to your home.
The fact that you are willing to say, ‘I do not understand, and it is fine,’ is the greatest understanding you could exhibit.
The fact that you are willing to say, ‘I do not understand, and it is fine,’ is the greatest understanding you could exhibit.