Hello Option Traders,

Introduction

            Thanksgiving is only a few days away and we are already winding down in anticipation. There will be a nice, big potluck in the office tomorrow (Tuesday), people are taking vacation, and spirits are generally high considering the economic condition the United States (and the world) is currently involved.

            Black Friday will come and U.S. citizens will contribute to commerce. The retailers may not be satisfied with the results therefore do not be surprised if more retail chains declare bankruptcy by Quarter 2 2009. Depending on how you decide to view the situation, it could be a good thing or bad that some markets are flourishing and others are failing. In order for commerce to grow and change, corporate giants must fail. As corporations declare bankruptcy or seek government help in some other way, it gives an opportunity for a lesser-known company to increase its market share and eventually become a giant in the other giant’s shadow. This is the circle of capitalism; isn’t it great!

5 Reasons to be Thankful This Year

            With that said, let’s tackle today’s topic. Thanksgiving: A time to give thanks; as we see the holiday today anyway. There are a few things I see as worthy of ‘thanks’ this year. You may or may not agree with the list, but it fun to create none-the-less.

#5: Lower Crude Price

            Crude oil is falling very fast. As a matter of fact, we have not seen this kind of drop in more than a decade. The crude oil price per barrel has been lower, but the acceleration of which the commodity has dropped is phenomenal. The will be some repercussions of the falling crude oil prices, but for the consumer, this is a break we have all needed.

            During the last two (2) years while crude oil skyrocketed, U.S. consumers were paying upwards to $4.25 per gallon of gasoline. However, wages were not rising; the minimum wages rose, but mean wages did not. This meant that people were paying more for gasoline than were making in salary to compensate. Just like anything else, if someone has to pay more for one item, they must cut spending on something else. Most consumers cut spending by reducing the amount of services they had (DirecTV, HD Cable, additional cell phone features, dining out, retail, etc.). This trickle effect has taken its toll on the retail and service sectors all over the U.S. Now that consumers are spending less on gasoline, there is a good possibility that there will be increased spending in other currency circulating methods and start the economic chain of events all over again.

 

            Thanksgiv-o-meter Reading: 8

#4: The Incredible Bear Trending Market

            Like it or not, traders have been blessed with a fantastic trending market for multiple investment opportunities. If you are not one of the traders taking advantage of this market, then I’m sorry to say, you are allowing money to slip through your fingertips. Read this.

            Example: Last Friday (Expiration Friday for Options), I submitted a Chart of the Day for a GOOG Bear Call Spread that was yielding a 29% return for 1 day. I paper traded the GOOG Bear Call using the Wizetrade Options Paper Trade account and this is what resulted by 2:18pm CST (40 minutes before market close).

 

$1,550 in one day.

 

NOTE: The value would have been more if the options expired over the weekend. Due to a current limitation in the paper trade engine, I had to close the position before market close.

#3: Wizetrade

            I am very thankful for The Wizetrade Group. Not only did this company give me a chance to prove myself as a valuable asset, they are broadcasting to you (the viewer) 100% high definition tv programming resulting from a multimillion dollar studio. Wizetrade is doing everything they can to make sure their clients get the absolute best products for their money.

#2: The G-Phone

            Google has entered the mobile market once again with the G1 (G-Phone) by HTC and carried by T-Mobile. The reason we should be thankful is the fact that Google has produced a power operating system for mobile phones to combat Apple and Microsoft in the mobile industry. This validates the need for suppliers to create more content and better quality since there are now three (3) major parties involved in this market. Competition tends to bring out the best in companies since the demand from consumers increases.

            The G-Phone will open the doors to a major wireless world where in the future mobile phones will be the primary personal electronic device and will almost eliminate the necessity for a home personal computer. At least, that’s where Google sees the future.

#1: Asa Griggs Candler

            You probably have no idea who this person is, do you? Well, if you’re internet savvy, by now you would have thrown the name into Google and hit the Wikipedia website. After a few minutes, you would have read the information on him, but do you know why? Aha! That’s the reason for the post. =)

            Asa Griggs Candler is the creator of the ‘coupon.’ According to Wikipedia, Candler was a partner for the Coca-Cola Company in 1887 and beyond. He introduced an idea as a marketing method to get people to drink Coca-Cola across the United States. Candler had sales representatives and company employees hand out and mail out coupons for the soda beverage. Basically, by 1913, every state in the United States has been served a Coca-Cola beverage.

            The reason for this being #1 is the simple fact that this idea was brilliant! The coupon gives us the reason to shop, the reason to look for competitive pricing, and the reason for all of us to be smart consumers in the retail world. It also lead to the creation of a ‘coupon’ for the stock market which eventually became the option contract.

            That’s all the reason I need.

Conclusion

            I hope you enjoyed the post today. If you have any comments or suggestions for future topics, feel free to email me: ttruelove@wizetrade.com. As an added bonus, I will be hosting The Opening Bell in the Virtual Classroom this morning (Monday) and tomorrow (Tuesday.) I hope you will join me and ask many questions as we all learn about the markets together. Have a great day and happy trading.

 

Tim Truelove

National Trainer II, Wizetrade Options

 

 

Hello Option Traders,

Introduction

            Thanksgiving is only a few days away and we are already winding down in anticipation. There will be a nice, big potluck in the office tomorrow (Tuesday), people are taking vacation, and spirits are generally high considering the economic condition the United States (and the world) is currently involved.

            Black Friday will come and U.S. citizens will contribute to commerce. The retailers may not be satisfied with the results therefore do not be surprised if more retail chains declare bankruptcy by Quarter 2 2009. Depending on how you decide to view the situation, it could be a good thing or bad that some markets are flourishing and others are failing. In order for commerce to grow and change, corporate giants must fail. As corporations declare bankruptcy or seek government help in some other way, it gives an opportunity for a lesser-known company to increase its market share and eventually become a giant in the other giant’s shadow. This is the circle of capitalism; isn’t it great!

5 Reasons to be Thankful This Year

            With that said, let’s tackle today’s topic. Thanksgiving: A time to give thanks; as we see the holiday today anyway. There are a few things I see as worthy of ‘thanks’ this year. You may or may not agree with the list, but it fun to create none-the-less.

#5: Lower Crude Price

            Crude oil is falling very fast. As a matter of fact, we have not seen this kind of drop in more than a decade. The crude oil price per barrel has been lower, but the acceleration of which the commodity has dropped is phenomenal. The will be some repercussions of the falling crude oil prices, but for the consumer, this is a break we have all needed.

            During the last two (2) years while crude oil skyrocketed, U.S. consumers were paying upwards to $4.25 per gallon of gasoline. However, wages were not rising; the minimum wages rose, but mean wages did not. This meant that people were paying more for gasoline than were making in salary to compensate. Just like anything else, if someone has to pay more for one item, they must cut spending on something else. Most consumers cut spending by reducing the amount of services they had (DirecTV, HD Cable, additional cell phone features, dining out, retail, etc.). This trickle effect has taken its toll on the retail and service sectors all over the U.S. Now that consumers are spending less on gasoline, there is a good possibility that there will be increased spending in other currency circulating methods and start the economic chain of events all over again.

 

            Thanksgiv-o-meter Reading: 8

#4: The Incredible Bear Trending Market

            Like it or not, traders have been blessed with a fantastic trending market for multiple investment opportunities. If you are not one of the traders taking advantage of this market, then I’m sorry to say, you are allowing money to slip through your fingertips. Read this.

            Example: Last Friday (Expiration Friday for Options), I submitted a Chart of the Day for a GOOG Bear Call Spread that was yielding a 29% return for 1 day. I paper traded the GOOG Bear Call using the Wizetrade Options Paper Trade account and this is what resulted by 2:18pm CST (40 minutes before market close).

 

$1,550 in one day.

 

NOTE: The value would have been more if the options expired over the weekend. Due to a current limitation in the paper trade engine, I had to close the position before market close.

#3: Wizetrade

            I am very thankful for The Wizetrade Group. Not only did this company give me a chance to prove myself as a valuable asset, they are broadcasting to you (the viewer) 100% high definition tv programming resulting from a multimillion dollar studio. Wizetrade is doing everything they can to make sure their clients get the absolute best products for their money.

#2: The G-Phone

            Google has entered the mobile market once again with the G1 (G-Phone) by HTC and carried by T-Mobile. The reason we should be thankful is the fact that Google has produced a power operating system for mobile phones to combat Apple and Microsoft in the mobile industry. This validates the need for suppliers to create more content and better quality since there are now three (3) major parties involved in this market. Competition tends to bring out the best in companies since the demand from consumers increases.

            The G-Phone will open the doors to a major wireless world where in the future mobile phones will be the primary personal electronic device and will almost eliminate the necessity for a home personal computer. At least, that’s where Google sees the future.

#1: Asa Griggs Candler

            You probably have no idea who this person is, do you? Well, if you’re internet savvy, by now you would have thrown the name into Google and hit the Wikipedia website. After a few minutes, you would have read the information on him, but do you know why? Aha! That’s the reason for the post. =)

            Asa Griggs Candler is the creator of the ‘coupon.’ According to Wikipedia, Candler was a partner for the Coca-Cola Company in 1887 and beyond. He introduced an idea as a marketing method to get people to drink Coca-Cola across the United States. Candler had sales representatives and company employees hand out and mail out coupons for the soda beverage. Basically, by 1913, every state in the United States has been served a Coca-Cola beverage.

            The reason for this being #1 is the simple fact that this idea was brilliant! The coupon gives us the reason to shop, the reason to look for competitive pricing, and the reason for all of us to be smart consumers in the retail world. It also lead to the creation of a ‘coupon’ for the stock market which eventually became the option contract.

            That’s all the reason I need.

Conclusion

            I hope you enjoyed the post today. If you have any comments or suggestions for future topics, feel free to email me: ttruelove@wizetrade.com. As an added bonus, I will be hosting The Opening Bell in the Virtual Classroom this morning (Monday) and tomorrow (Tuesday.) I hope you will join me and ask many questions as we all learn about the markets together. Have a great day and happy trading.

 

Tim Truelove

National Trainer II, Wizetrade Options

 

It pays to remember that a holiday week tends to be hard to trade.  The closer to Thanksgiving the fewer traders trading, the more unperdictable the market & the more likely the unexpected which at least 50% the time is going to be bad.  Enjoy the time with friends & family.  There will be time to trade later.

It pays to remember that a holiday week tends to be hard to trade.  The closer to Thanksgiving the fewer traders trading, the more unperdictable the market & the more likely the unexpected which at least 50% the time is going to be bad.  Enjoy the time with friends & family.  There will be time to trade later.

 

Hello Option Traders,

Introduction

            Good morning Option Traders. Welcome back to the Wizetrade Options Blog for another exciting topic. Today’s topic comes from an excellent question from a Wizetrade client that I would like to share the answer with you. Many of us have questions about certain aspects, but are afraid to ask. The reasons can vary between the embarrassments of being ‘called out’ (no pun intended) to thinking the question is irrelevant. I’m here to tell you that no question is too basic or minor to receive an answer.

            I’m sure I annoyed plenty of traders here at Wizetrade when I started. I had millions of questions, it seemed, that I would frantically search for the answer. Especially when discussing options, there are almost limitless possibilities and outcomes. Questions come about. Don’t be afraid to ask.

Excellent Question from a New Option Trader

            Below is the question I received about out-of-the-money options from a new option trader.

“I looked on Wizetrade TV and else where for training on "buying out of the money" options.  I know this is a "No, No" under the Wizetrade philosophy.  On Wizetrade TV today, I heard about Ernesto purchasing "out of the money" options for Toyota Motors.  The in the money options are fairly expensive, however there were some out of the money puts that looked attractive from a price point.  Do you know where I might be able to find information on out of the money options.  Ernesto was specifically looking at an April out of the money option but never said a strike price.  Based on the entire TV cast, I know they highly respect his opinions, so now I'm curious about "out of the money" options. 

What I do know is. The delta is much lower, thus the movement of the option slower.  Thanks for any other guidance or suggestions for training.”

Answer

            “Out of the money options can be an excellent way to help diversify a portfolio. They are low cost, have tremendous profit potential, and have a practically low risk amount. That being said, when traders go into out-of-the-money options, most of them understand that their risk tolerance should be 90-100% of the premium. The OTM option acts like a lottery ticket that follows trend behavior. Volatility is the only factor moving the value of the option. Since there is nothing linking the stock to the option, the movement of the option is directly in the hands of the market makers. If they can buy and sell many contracts, the price will move. However, there may be days and sometimes weeks where the option will not move at all. If you decide to trade OTM options, look for high open interest and view the daily volume of the contract. OptionsXpress has daily volume for options on their website.

            OTM options tend to have a ‘sweet spot’ around .20 - .30 delta. The calculations allow the options to jump in delta between these points and approach .50 faster than going from .40 to .50. Unless you want to be committed to the option for a long period of time, look to ride the option to an at-the-money value where the time value is highest. Once the option starts to gain intrinsic value, the time value will move inversely. This means the stock would need to go even further in the money to make up the value lost from movie through the ATM delta range (.50). In other words, look to purchase around a .20 (.30) delta and sell at .50 or close.

            I can’t stress the fact that you need to be willing to risk a huge portion of the premium for the volatility shot. You are trading 100% pure speculation. There is no guarantee that the trade will work. At least with ITM options, there’s the value of the stock. The stock must trend in your favor in order to make any profits with OTM options. Use them as a supplement and not a sole income generator.

            I hope this helps you out. Thanks for asking such a great question.”

Visual Example

This is an example of strike prices laid out based on theoretical stock value. The point is to see the steps the stock has to take to move from out-of-the-money strikes to at-the-money strikes.

 

Imagine the stock is currently at $20 per share and you decide to purchase a 25 strike option. The option is OTM (out-of-the-money) and the stock must work to approach the strike. It’s important to note that time value of options increase the closer the stock gets to the ATM (at-the-money) value. As stocks move away from the ATM strike, the time value decreases.

 

We all have to pay a premium for the option, no matter how far OTM it may be. In this case, the premium of a 2 strike OTM option on this stock 2.50 (DTE is a variable). The stock must increase by $5 per share in order for the option purchased to be ATM and receive the highest time value for it’s expiration month.

 

 

This is a zoomed in example of the movement required for the stock to achieve ATM status with the option purchased. Remember that there is always an option that is ATM, OTM, and ITM at all times. If the stock is trading at $20 per share and a $20 strike is available, the 20 strike is the current ATM option. Strike prices lower than 20 would be the in-the-money options and anything higher than 20 would be the out-of-the-money options. This is a revolving process.

 

You can see from this hypothetical example that as the delta increases with the stock increase, the time value associated will increase as well. OTM options are 100% time value so the value is extremely liquid. The time value increasing from a .20 delta to a .50 delta can range tremendously on buying and selling pressure. I used the linear example above as a number diagram only. The movement is not exact.

Conclusion

            The morale of the story is to ask questions. Who knows, you may ask a question someone else is too embarrassed to ask.

 

Tim Truelove

National Trainer II, Wizetrade Options

 

 

Hello Option Traders,

Introduction

            It’s no secret that when the markets turn down and economic growth comes to a screeching halt, the crazies come out of the woodwork. For today’s fun and exciting edition of ‘OptionsBlog Live,’ I’ve decided that the U.S. economy just isn’t falling. In fact “global warming is destroying capitalism” and other ridiculous statements await you. Let’s countdown the daily roundup of apocalypse generating news and chalk all our worldly problems on the three ‘G’s: God, Glory, and Global Warming.

5 Signs of the Looming Market Apocalypse

            I hope everyone has their super-stock of canned vegetables in their storm cellar because we’re about to dive right into today’s news that proves doomsday is just around the corner. By the time I’m done with this review, I will have a ‘Global Warming Representative’ arrive at my desk wearing a solid black suit and mirror glasses. I can see it now; I’ll be restrained and taken into Arizona or someplace with a lot of sand (maybe Afghanistan, who knows) and will be told that global warming is here and my punishment will be to feel mother nature’s wrath. Someone will remove the blindfold (because I have to be blind folded to be sure I can’t see global warming coming at me) and will be left in the desert with nothing but a McDonalds to keep me company. There I will feel Mother Nature’s heat as I begin to break a sweat. “Wow, it sure is warm…in the desert,” I’m sure is something I will state as I slurp down a super-sized soda with ice.

            The doomsday device is here everyone. Be sure to sync and load up your iPod before we all start to sweat. This is real, people!

5. Paramount Pictures and the Tale of Childhood Memories

            Let’s start this countdown off with a ‘bang.’ Paramount Pictures has done some really stupid things in the past.  Jackass 1-3, Nacho Libre, Napoleon Dynamite, The Stepford Wives (remake), Zoolander, Pootie Tang, do I really need to go on? I haven’t even hit the bad stuff from the 90’s yet. However, there are a few decent movies to come out of the studio too. There are actually too many to list, but I’m sure you can use your imagination…and think real hard.

            This may shock, amaze, scare, frighten, disgust, or even condemn you, but Paramount is set to release a remake of Star Trek May 2009. Let that soak in for a moment…

            I have to get a few things out before I talk about the impact of this on the rest of the world. I am a total sci-fi geek. I loved the old Star Trek episodes with William Shatner, DeForrest Kelly, Leonard Nimoy, and all the others. To this day, I believe that series (the original) is by far the best of all the other Star Trek spinoffs. I am actually excited to see this remake and that’s the problem. I am a huge fan of the tv show Lost. J.J. Abrams, Lost Producer and Alias creator, is staged at the helm of this remake which actually gives me some hope that the movie will actually be pretty good. I hear that Leonard Nimoy actually makes a cameo. 

            The reason this is a sure sign of the apocalypse is the fact that they are remaking the original Star Trek tv series into a movie for 2009. Do you remember watching that show? Some do, some don’t. The concept is simple:

 

Capt. Kirk + Alien Women (Mudd * Likable Factor) / (Dr. McCoy * Spock) + Uhura (Interracial Kiss * William Shatner’s Ego) = 3 Seasons of Pure Childhood Memories.

            Now, imagine those memories. You remember? The light hearted humor, sarcasm, cranky ‘Bones,’ Roarin’ 20’s Fun, and all the other fun stuff that accompanied the show.

            Ok, take all those wonderful memories of the show and toss ‘em in the blender. You ain’t gonna use them after you see this movie. As a matter of fact, you’ll probably never watch another movie…ever. Hollywood took your show that would live in infamy with a legacy of increasingly older members of the Starship Enterprise spanning across 6 ½ movies and told you all your old memories are wrong.

            What’s next? Star Wars? Huh?! George Lucas is going to dump his stake of Star Wars in the hands of the next Hollywood ‘It’ guy and say, “Holy Crap! I’ve done it all wrong all these years. Please take my crappy movie and make it better. Ruin the lives of millions of fans everywhere and especially those kooks who started their own Jedi Church. I’m going to play with Lego’s. No calls!”

 

            NOTE: If you clicked the link above and saw what the new vision for Star Trek will be, I’m sure you’re either drooling at the hunky delight or washing your eyes out with bleach.

4. Henry Paulson’s Guide to Who Gets Money, When: Learn to Pick and Choose Who Lives and Who Dies; Just Like the Big Boys

            Imagine you are Treasury Secretary Henry Paulson and you held the financial ‘life’ of thousands of companies in your hands. Would you play favorites?

 

If you said anything but “Yes,” then you just lied.

 

            The fact our Treasury Secretary and Fed. Chairman, Ben Bernanke, have as much power as Zeus is a seriously scary thought. Apparently, we have a strict policy in the United States to bail out banks since, of course, they loan money. Not only do they loan money, but they borrow from the Fed. Seems a little suspicious…

            Not only that, but here’s a quote from Paulson in a Bloomberg article.

 

“The rescue package was not intended to be an economic stimulus or an economic recovery package,'' 

 

            So, I suppose the $700 billion (plus over $300 billion of ‘pork’) we spent will eventually be paid back after the American people pay for the ability to pay for more borrowed money. This is completely understandable. You know what? No one needs automobiles anyway. What we really need is more banks. Banks to loan money to other banks to loan money to other banks…*headache*

            I understand there are always two sides to every story and some parts of this aspect seem rational and ‘believable,’ however, today is all about the APOCALYPSE!

 

3. Smokey and the Bandit: Now with 100% Less Sally Field

            Only in Texas will we find massively creative ways to illegally transport immigrants over a territorial border. This concept is not new or shocking to anyone. The part that should scare you is this. Next time you’re thinking about crossing the border into another country illegally, just hop on hoard you’re local Wal-Mart truck.

            Wal-Mart not only exploits third world laborers (and offers Americans excellent prices with crappy quality) they are now unofficially the official transport of illegal aliens.

            Texans don’t take too kindly to that kind of action in these parts. We shoot on site.

            I just got a great idea. I need to find a Hollywood director and producer who would be willing to make my new version of Smokey and the Bandit into a movie for 2010. The part of The Bandit could be played by Jerry Seinfeld and Sally Field’s character could be replaced with a mentally handicapped, sign language ‘speaking’ chimp wearing a ‘Jedi’ robe. All the lines from the chimp can be ‘Make it so!”

 

2. It’s Official; the SEC Hates Basketball

            First Martha Stuart killed television food, now the SEC is determined to forever hate Basketball. As you may or may not have heard, yesterday Mark Cuban was indicted by the SEC for insider trading.

            Mark has released a rebuttal to the claim saying (and I quote):

 

“The SEC can kiss my @!^.” -100% Real (possible falsity)

 

            If you know Mark Cuban, this quote isn’t really hard to believe. He did actually say during a conversation between Cuban and Faure (Mamma.com Chief Executive), “Well now I’m screwed. I can’t sell (the shares).”

            I’m not saying that insider trading should be encouraged, but what’s next? Football? Is that it SEC? Are you going to trample on the dreams of aspiring Football teams? Since you like going after ‘big-time Texas sports franchise owners,” why not set your sights on Jerry Jones. I hear he ‘sells drugs to kids with the help of the Girl Scouts and the Make a Wish Foundation.’ Oh, and he may or may not trade stock...I don’t know. 

            It is truly the end of the world when billionaires are made responsible for their actions. Dark Days be in America.

 

1. “ARRRRGH!”…’What?’ “I said ARRRRR!”

            Pirates. Yes, pirates are here and they are not taking prisoners. All the hope I had growing up being a pirate can actually happen. Unfortunately, there’s no such thing as walking the plank anymore. No, that took too much time and there was too much of a chance you could actually survive. Now, anyone can be a pirate with a few easy-to-access items:

 

3 UPS barcodes of your favorite cereal, Radical-O’s, one assault rifle stolen from your dad’s ‘gun club,’ and a couple of hostages.

 

            This whole idea of modern pirates gives me chills. Not because of the fact that there are still pirates around the world, but the possibility that Waterworld may actually exist one day. Kevin Costner fans, I’m sorry to say, need to let him go. Allow him to get a hobby and do something productive with his time.

            Think the threat of pirates won’t happen to you? Imagine taking your yacht out in the bay. It’s just you, your kids, wife, mistress, the whole happy family. Then, as if out of nowhere, you see it…the Jolly Rancher Jolly Roger. What do they want with you? It’s not like you’re poor or own an oil rig, you’re rich. It’s baffling to think what pirates want with someone who can afford their own yacht. Think about that next time you’re out ‘beating the recession’ with good old-fashioned money-spending!

            If nothing else, I’m sure Paulson would bail you out of Pirate Hell if you loaned him some money…or paid your taxes.

 

Conclusion

There it is folks; the count down to the apocalypse is finished. We can all go back to our trading world with none of this affecting our lives. None of this affects the way we travel, communicate, trade, entertain, or borrow. It’s good to be invincible. Now where did I put my $100 bill coaster for my solid gold margarita stein? Because I really don’t need water rings all over my platinum and diamond coffee table made with endangered tiger fur and children’s tears.

 

BTW:   At least one of those items in the countdown is directly caused by Global Warming. You can determine which ones J

 

 

Tim Truelove

National Trainer II, Wizetrade Options

 

 

Hello Option Traders,

Introduction

            It’s no secret that when the markets turn down and economic growth comes to a screeching halt, the crazies come out of the woodwork. For today’s fun and exciting edition of ‘OptionsBlog Live,’ I’ve decided that the U.S. economy just isn’t falling. In fact “global warming is destroying capitalism” and other ridiculous statements await you. Let’s countdown the daily roundup of apocalypse generating news and chalk all our worldly problems on the three ‘G’s: God, Glory, and Global Warming.

5 Signs of the Looming Market Apocalypse

            I hope everyone has their super-stock of canned vegetables in their storm cellar because we’re about to dive right into today’s news that proves doomsday is just around the corner. By the time I’m done with this review, I will have a ‘Global Warming Representative’ arrive at my desk wearing a solid black suit and mirror glasses. I can see it now; I’ll be restrained and taken into Arizona or someplace with a lot of sand (maybe Afghanistan, who knows) and will be told that global warming is here and my punishment will be to feel mother nature’s wrath. Someone will remove the blindfold (because I have to be blind folded to be sure I can’t see global warming coming at me) and will be left in the desert with nothing but a McDonalds to keep me company. There I will feel Mother Nature’s heat as I begin to break a sweat. “Wow, it sure is warm…in the desert,” I’m sure is something I will state as I slurp down a super-sized soda with ice.

            The doomsday device is here everyone. Be sure to sync and load up your iPod before we all start to sweat. This is real, people!

5. Paramount Pictures and the Tale of Childhood Memories

            Let’s start this countdown off with a ‘bang.’ Paramount Pictures has done some really stupid things in the past.  Jackass 1-3, Nacho Libre, Napoleon Dynamite, The Stepford Wives (remake), Zoolander, Pootie Tang, do I really need to go on? I haven’t even hit the bad stuff from the 90’s yet. However, there are a few decent movies to come out of the studio too. There are actually too many to list, but I’m sure you can use your imagination…and think real hard.

            This may shock, amaze, scare, frighten, disgust, or even condemn you, but Paramount is set to release a remake of Star Trek May 2009. Let that soak in for a moment…

            I have to get a few things out before I talk about the impact of this on the rest of the world. I am a total sci-fi geek. I loved the old Star Trek episodes with William Shatner, DeForrest Kelly, Leonard Nimoy, and all the others. To this day, I believe that series (the original) is by far the best of all the other Star Trek spinoffs. I am actually excited to see this remake and that’s the problem. I am a huge fan of the tv show Lost. J.J. Abrams, Lost Producer and Alias creator, is staged at the helm of this remake which actually gives me some hope that the movie will actually be pretty good. I hear that Leonard Nimoy actually makes a cameo. 

            The reason this is a sure sign of the apocalypse is the fact that they are remaking the original Star Trek tv series into a movie for 2009. Do you remember watching that show? Some do, some don’t. The concept is simple:

 

Capt. Kirk + Alien Women (Mudd * Likable Factor) / (Dr. McCoy * Spock) + Uhura (Interracial Kiss * William Shatner’s Ego) = 3 Seasons of Pure Childhood Memories.

            Now, imagine those memories. You remember? The light hearted humor, sarcasm, cranky ‘Bones,’ Roarin’ 20’s Fun, and all the other fun stuff that accompanied the show.

            Ok, take all those wonderful memories of the show and toss ‘em in the blender. You ain’t gonna use them after you see this movie. As a matter of fact, you’ll probably never watch another movie…ever. Hollywood took your show that would live in infamy with a legacy of increasingly older members of the Starship Enterprise spanning across 6 ½ movies and told you all your old memories are wrong.

            What’s next? Star Wars? Huh?! George Lucas is going to dump his stake of Star Wars in the hands of the next Hollywood ‘It’ guy and say, “Holy Crap! I’ve done it all wrong all these years. Please take my crappy movie and make it better. Ruin the lives of millions of fans everywhere and especially those kooks who started their own Jedi Church. I’m going to play with Lego’s. No calls!”

 

            NOTE: If you clicked the link above and saw what the new vision for Star Trek will be, I’m sure you’re either drooling at the hunky delight or washing your eyes out with bleach.

4. Henry Paulson’s Guide to Who Gets Money, When: Learn to Pick and Choose Who Lives and Who Dies; Just Like the Big Boys

            Imagine you are Treasury Secretary Henry Paulson and you held the financial ‘life’ of thousands of companies in your hands. Would you play favorites?

 

If you said anything but “Yes,” then you just lied.

 

            The fact our Treasury Secretary and Fed. Chairman, Ben Bernanke, have as much power as Zeus is a seriously scary thought. Apparently, we have a strict policy in the United States to bail out banks since, of course, they loan money. Not only do they loan money, but they borrow from the Fed. Seems a little suspicious…

            Not only that, but here’s a quote from Paulson in a Bloomberg article.

 

“The rescue package was not intended to be an economic stimulus or an economic recovery package,'' 

 

            So, I suppose the $700 billion (plus over $300 billion of ‘pork’) we spent will eventually be paid back after the American people pay for the ability to pay for more borrowed money. This is completely understandable. You know what? No one needs automobiles anyway. What we really need is more banks. Banks to loan money to other banks to loan money to other banks…*headache*

            I understand there are always two sides to every story and some parts of this aspect seem rational and ‘believable,’ however, today is all about the APOCALYPSE!

 

3. Smokey and the Bandit: Now with 100% Less Sally Field

            Only in Texas will we find massively creative ways to illegally transport immigrants over a territorial border. This concept is not new or shocking to anyone. The part that should scare you is this. Next time you’re thinking about crossing the border into another country illegally, just hop on hoard you’re local Wal-Mart truck.

            Wal-Mart not only exploits third world laborers (and offers Americans excellent prices with crappy quality) they are now unofficially the official transport of illegal aliens.

            Texans don’t take too kindly to that kind of action in these parts. We shoot on site.

            I just got a great idea. I need to find a Hollywood director and producer who would be willing to make my new version of Smokey and the Bandit into a movie for 2010. The part of The Bandit could be played by Jerry Seinfeld and Sally Field’s character could be replaced with a mentally handicapped, sign language ‘speaking’ chimp wearing a ‘Jedi’ robe. All the lines from the chimp can be ‘Make it so!”

 

2. It’s Official; the SEC Hates Basketball

            First Martha Stuart killed television food, now the SEC is determined to forever hate Basketball. As you may or may not have heard, yesterday Mark Cuban was indicted by the SEC for insider trading.

            Mark has released a rebuttal to the claim saying (and I quote):

 

“The SEC can kiss my @!^.” -100% Real (possible falsity)

 

            If you know Mark Cuban, this quote isn’t really hard to believe. He did actually say during a conversation between Cuban and Faure (Mamma.com Chief Executive), “Well now I’m screwed. I can’t sell (the shares).”

            I’m not saying that insider trading should be encouraged, but what’s next? Football? Is that it SEC? Are you going to trample on the dreams of aspiring Football teams? Since you like going after ‘big-time Texas sports franchise owners,” why not set your sights on Jerry Jones. I hear he ‘sells drugs to kids with the help of the Girl Scouts and the Make a Wish Foundation.’ Oh, and he may or may not trade stock...I don’t know. 

            It is truly the end of the world when billionaires are made responsible for their actions. Dark Days be in America.

 

1. “ARRRRGH!”…’What?’ “I said ARRRRR!”

            Pirates. Yes, pirates are here and they are not taking prisoners. All the hope I had growing up being a pirate can actually happen. Unfortunately, there’s no such thing as walking the plank anymore. No, that took too much time and there was too much of a chance you could actually survive. Now, anyone can be a pirate with a few easy-to-access items:

 

3 UPS barcodes of your favorite cereal, Radical-O’s, one assault rifle stolen from your dad’s ‘gun club,’ and a couple of hostages.

 

            This whole idea of modern pirates gives me chills. Not because of the fact that there are still pirates around the world, but the possibility that Waterworld may actually exist one day. Kevin Costner fans, I’m sorry to say, need to let him go. Allow him to get a hobby and do something productive with his time.

            Think the threat of pirates won’t happen to you? Imagine taking your yacht out in the bay. It’s just you, your kids, wife, mistress, the whole happy family. Then, as if out of nowhere, you see it…the Jolly Rancher Jolly Roger. What do they want with you? It’s not like you’re poor or own an oil rig, you’re rich. It’s baffling to think what pirates want with someone who can afford their own yacht. Think about that next time you’re out ‘beating the recession’ with good old-fashioned money-spending!

            If nothing else, I’m sure Paulson would bail you out of Pirate Hell if you loaned him some money…or paid your taxes.

 

Conclusion

There it is folks; the count down to the apocalypse is finished. We can all go back to our trading world with none of this affecting our lives. None of this affects the way we travel, communicate, trade, entertain, or borrow. It’s good to be invincible. Now where did I put my $100 bill coaster for my solid gold margarita stein? Because I really don’t need water rings all over my platinum and diamond coffee table made with endangered tiger fur and children’s tears.

 

BTW:   At least one of those items in the countdown is directly caused by Global Warming. You can determine which ones J

 

 

Tim Truelove

National Trainer II, Wizetrade Options

 

 

Hello Option Traders,

Introduction

            Good morning Option Traders. Welcome to another Tuesday and depending on your geographical location, you may or may not believe it is a beautiful day. I am going to imagine that we are all enjoying a relaxing time in Maui. Margaritas and option opportunities flow like water. *Pop* That was the bubble bursting when I realized that I still have to discuss a topic for today…in Dallas….at work; not Maui. That shouldn’t stop you from enjoying the beach.

NOTE: If you are, indeed, enjoying the fall on the beaches of Maui, FedEx me some sand would ya? It would do wonders for my cubicle J

 

Option Hunter

            Option Hunter is one of those little applications that often remind people of a step child that’s always ‘hanging around.’ It’s not the kid’s fault he’s last to be picked for gym, is pale as a ghost, and snorts when he laughs. I feel Option Hunter has this type of outward personality when it first meets a new home with your computer.

            Option Hunter also resembles the younger brother that’s always falling behind big brother Wizefinder. “Why can’t you be more like your big brother?” The truth of the matter is Option Hunter is its own entity. It’s not a clone of another product. Option Hunter is independent, specific, powerful in its own way, and this really irritates some people.

            The purpose of this article is to bring a little light to the purpose and strengths of Option Hunter and to debunk some common comparisons to its big brother, Wizefinder. This relationship reminds me of an analogy I once used between the two products.

• Wizefinder is like the star high school quarterback. It has mass appeal, very popular (with the ladies :P), and anyone that likes the ‘sport’ will enjoy it.
• Option Hunter reminds me of the quiet guy sitting in the library studying, self improving and waiting for the right opportunities to come its way. It may not appeal to everyone (especially those that swoon over the star quarterback) but those looking for something specific will truly appreciate the one that’s ‘in the know.”

 

Practical Application

            The first step is to identify what to use Option Hunter to accomplish. Option Hunter is designed to search through optionable stocks and filter choices based on the Wizetrade criteria.

            “That’s fine and everything Tim, but it doesn’t work.” –Anonymous

            The concept of ‘doesn’t work’ is circumstantial; an opinion. Ask yourself the question, “What do I need from Hunter?” It’s possible to run a search and view the returns and not find anything that matches your personal searching criteria. What about the software ‘doesn’t work?’

“Wizefinder brings me back everything I want to see; it works. Why should I use Option Hunter?” –Anonymous

So, apparently quantity is valued over quality. Do you realize there are only about 3000+ optionable stocks in the U.S. stock market? The stocks that have options to purchase are mostly associated with one or several indexes. These stocks are heavily traded or emerging companies.

 

Comparing Wizefinder to Option Hunter is like staring at a grapefruit casting a shadow on a strawberry and making a statement, “…those are two completely different fruits…” –Anonymous takes another swig from the bottle.

Expectations

            Option Hunter’s sole purpose is to scan optionable stocks and return options that match the Wizetrade criteria. This means the stock must meet certain requirements and the option must meet its own set of requirements to be returned to the user. I suppose the expectation of users is to open Hunter, run a scan, and be blown away at all the stocks available to trade long. Well, I got some news for you; the program looks for options, not stocks.

            There are hundreds of thousands of options in the U.S. equities market. Which one is the right one? Well, you can search for the stock with Wizefinder and then narrow down the search with D.E.P.O.T. or other methods or you can scan with Hunter and find the stock AND the option that qualifies.

Realizations

            The realization after using Option Hunter is that it doesn’t work the same as Wizefinder. That’s a true realization. They are not meant to be the same.

            I have been working with Development on the next installment of Option Hunter and have listened to many of your suggestions for improvement. Not only will there be more stocks being return to the screen, there will be more options. The same simple scan functionality will remain and we are adding new predefined strategies. Scans can be fully customized or created from scratch to look for exactly what you want. The predefined strategies have been loosened up to allow more stocks and options through the gate.

            We are trying to satisfy the ‘quantity’ people without alienating the ‘quality seekers.’

Conclusion

            The star quarterback with cheerleaders hanging on him like Christmas tree decorations may laugh and point at the geek in the library studying for his physics final, but who will be laughing when the quarterback realizes that it’s not the amount of questions answered but how many answered that were correct.

 

Tim Truelove

National Trainer II, Wizetrade Options

 

 

Hello Traders,

Introduction

            Welcome to the Wizetrade Options Blog with Tim Truelove, National Trainer II. If anyone has spent even a remote moment on this blog site, they would know that anything goes. There is no telling what I’m going to write about from day to day. This concept is a way for me to peak the reader’s interest.

            Today marks a very special occasion. For your entertainment (and mine) I present to you an exclusive interview with Chief Market Strategist for Wizetrade Commodities, Ron Smith. Ron was good enough to sit down with me for an hour or so answering questions, laughing, and posing for photos. Even though Ron had to make some serious shifts in his schedule to accommodate my interview needs, he stepped up and made it happen. That’s the kind of man Ron Smith is; a doer. Actions speak louder than words with this man. I learned from the ‘Ron Smith Legend’ that when he was ambushed by Gold peddlers while adventuring in the ‘richest place in the world,’ he did what any real man would have done; he whipped out his ‘Bonds of Justice’ and laid them to rest. Ron was able to secure the Gold, control the Bonds, and rescue the Princess. True story.

            The FOREX Avenger was not available for comment.

 

(TT) Tim Truelove, interviewer/photographer

(RS) Ron Smith, Chief Market Strategist Wizetrade Commodities

Ron Smith on the Wizetrade TV set during Friday’s Future Focus.

Ron Smith Interview

(TT) Ron, you are a brilliant man. You’re experienced in market trading, you’re extremely knowledgeable with Commodities, and you have a heck of a personality, what in the world brought you to Wizetrade?

(RS) Well, I was going to buy the product; Commodities Made Easy. I really wanted to see the inner workings of the company since they appealed to me with making trading Commodities ‘easy.’ I read a lot of bogus stuff online and wanted to find out for myself. I didn’t fully ‘understand’ the software, but I liked the name, Commodities Made Easy (now Wizetrade Commodities). I started trading commodities after the fall of the internet companies about 1997. I went to a job fair and met up with Susan DuFour. We sat down and talked for about an hour and she asked me, “Have you ever thought about teaching commodities to others?” I love to talk about commodities; I could talk about them all day long. This was just a perfect fit.

 

 (TT) You’ve been the head trainer for the Commodities software practically ever since you started with the company, how does it feel to have that kind of influence on the software?

(RS) My influence seems to be pretty wide around here. When I started, the software (Wizetrade Commodities) was lacking. It needed all commodities made simple. The biggest issue was the lack of electronic markets to keep the liquidity. Commodity Explorer was no broad-based and this was a real issue for traders across the board. I got a vision of what the software ‘should’ look like and went for it. I’m pretty picky; patient but picky.

(TT) How are you able to balance your personal trading time with training?

(RS) It helps that I am a swing trader. I’m not constantly entering a bunch of trades at once and spreading my attention all over the place. I used to be a Position trader. I find it easy to separate paper trading, like on air, from my live trading. When I was doing solely Talk Live, it was real easy to trade. TV makes it much more difficult.

 

Didn’t think he was so personable did ya?

(TT) If you take delivery of any Commodity and put it in your back yard, which would it be and why?

(RS) Gold. Definitely gold or silver. It’s always a handy thing to have. Metals are a feeling of security. There will always be someone willing to buy your gold or silver. I would also want coffee. Just imagine the aroma..mmmmmm.

(TT) So if I trade commodities, will I end up with a trillion tons on wheat in my yard?

(RS) (Laughs) I had that same question when I started with commodities. When you fill out the paperwork for an account, you have to check a box either speculator or hedger. A speculator is cash settlement only and is ‘out of the game.’ Speculators are not commercial or a producer. They can’t take delivery. There are so many barriers against delivery. First, you have to pay, in full, up front at the time of settlement. You must write a check, send it off, arrange transportation, sign a book of documents…impossible to overlook. Don’t forget about storage costs and insurance. I’d rather just close a position that deal with that mess.

(TT) What if I really wanted that wheat….you know, for bread or something?

            (RS) (Laughs) It goes back to the previous question…you have to be a hedger.

(TT) What are your real thoughts on Blake Morrow?

(RS) “Ha, ha…on Blake?” I like Blake. He’s a hard working, intelligent man. He’s just an overall great guy. My wife would say, “Beauty is only skin deep, but ugly is through and through.”

 

Ron is everywhere!

 

(TT) What plans are in store for the next release of Wizetrade Commodities?

(RS) We’re looking at least doubling the markets to include foods and softs. We’re going to expand the indexes and open up currency futures. A couple years ago, we didn’t have electronic markets to allow us to expand the software. Now there are many more available.

(TT) There’s a lot of talk about GM possibly declaring bankruptcy in the news right now. What do you think this will do to the Commodities market specifically if either the Feds bail them out or they allow GM to declare bankruptcy?

(RS) –Interrupting the question- “Which I called two years ago, by the way.” GM declaring bankruptcy will be devastating to the U.S as well to other automakers. There should not be a government bailout, however. One of the biggest changes due to a GM bankruptcy would be the Unions. It would be the final nail in the coffin for them. GM would be separated and purchased by multiple entities; it’s not like it will go away. Ford is weaker than GM and would be in the same danger. This is just the way markets deal with business. Not to mention doubling the unemployment. The bankruptcy wouldn’t affect just GM.

(TT) Crude oil is down to around 58.00 per barrel from almost $150 earlier this year; will there be a backlash to the economy specifically caused by the sudden drop in crude oil value?

(RS) Yes, we’re seeing it now. Back in ’84 during the Oil Bust, crude dropped from $45 to $4 per barrel. Bank assets shrunk and we saw something called ‘rig stacking.’ That’s where drilling equipment would be piled at the place of business not to be used. We called it ‘rig stacking.’ People with royalties on rigs would see shrinking returns. Oil and gas would shrink. There would be tremendous pullbacks. Revenues would fall; just a huge cumulative effect would occur. We’re seeing the effects right now, but the ‘little guy’ isn’t feeling it. In the long run, we need to be drilling now, but we are not.

(TT) If you could go back in time and meet any person in the world, who would it be?

(RS) There are way too many to choose…Woodrow Wilson in 1913 and discuss the Federal Reserve Act.

(TT) If you could ask that person one thing, what would it be?

(RS) I’d love to meet him and ask, “What the **** were you thinking?” (Laughs) Actually, I would want to spend an hour with Abraham Lincoln. I would ask for a precious hour for some good, old fashioned common sense. When I went to Washington, DC, I went to the Lincoln Memorial and I picked up a History Pictorial book and looked at the price; $5. I asked the lady at the counter if they had a book on Lincoln’s ‘Greatest Hits.’ Yeah, they did. I looked at the price…$2. I thought the price was wrong. The book with Lincoln’s speeches is worth a lot more than $2. When you compare his speeches to Bush, it makes you cringe at the level of pragmatic thinking we have now.

 

Circa 1864. Not pictured, Abe Lincoln.

(TT) No really, what are your REAL thoughts on Blake Morrow?

(RS) (Laughs) Yeah….. (laughs). “They don’t call him the ‘Little Corporal’ for nothing. You may or may not get that reference.

(TT) Is there anything else you’d like to say to the Wizetrade audience reading this post?

(RS) No buy, sell, or hold, but commodities are a buy. All major funds that did not hold commodities lost a lot of money. The Harvard Endowment Fund put $250,000,000 into commodities and is up 8% currently. It just ensures the liquidity in the commodities markets. I believe commodities will be slow and steady, but returning bout 10% a year. It’s a great return.

(TT) Last question Ron, what would you say to those traders out there that are too scared to jump into the Commodities market?

(RS) I’d say…and I don’t want to be rude…but not everyone is a commodity trader. However, if you can’t even consider the possibility of trading commodities, then I don’t think you’re a very successful trader. If you’ve never traded them, you will never know. If you never open the door…every successful trader trades commodities in their portfolio. You are missing out of an opportunity of a lifetime.

 

Statuesque and brilliant.

Conclusion

Thank you, Ron. Ron Smith everyone! *loud cheering is heard from all over the building*

 

 

 

Hello Option Traders,

Introduction

            Well, it’s Friday and everyone know what that means…slacker day. Yes, Friday has always been the international ‘it’s almost the weekend and I’m not doing squat’ day recognized in at least 1 country. Today also marks the third day of options basics for the Wizetrade Options Blog. I will start fresh with new and exciting content next week.

Back to Basics pt. 3

            The parts of an option are important factors when browsing for the ideal option candidate. Today, I will steer to a broad subject and take options in context to supply and demand.

Major Pros and Cons of Options

Pros: The option can offer great leverage when going long and can give a trader a credit in their account when going short. The leverage offered can range greatly depending on the right option choice, but a trader can almost always expect to spend a minimum of about $800 - $1600 on most options (1 contract) when chosen correctly.

 

Cons: There is a time limit. We rent the stock’s movement for a limited time so the return needs to be quick. Short sell option trades will have an unlimited loss potential. It is possible to credit $1000 into your bank account and end up losing $10000 or more if you are not careful. Long option trades are used to counter this mentality and provide a limited risk amount.

Basics of Supply and Demand

The simplicity of the stock market is rather insulting. When someone thinks of the stock market, they usually see images of what happened in 1929, the great stock market crash. They see images of people jumping out of windows to their death and crowding banks in a desperate grasp for their money. Even though things like this happened in the past, many measures are in place now to prevent this kind of tragedy from occurring again. In reality, the elementary element of the market movement is made up of supply and demand. If someone has something you want, they have the ability to increase the price to what they want for it and then sell it to you for that price since your demand is high.

The stock market uses this idea each and every day with the price of a given stock. If the demand for that stock is high and/or the supply is low, the price goes up. If the demand for that stock is low and/or the supply is high, the price goes down. We see this in everyday life as well. Here’s an example:

If an Italian automaker produces 200 sports cars and we see an increase in demand, those cars will be sold to the highest bidder since there is not enough supply to go around to everyone who wants one. If that same automaker produces 200,000 cars and the supply outweighs the demand, the automaker would have to lower the price of the car in order to sell it.

In all honesty, there is no reason to dive any further into the reason a stock increases and decreases in value than simple supply and demand.

Risk/Reward Management

Why Do We Lose Money?

Humans are instinctively emotional and we are the most emotional when it comes to money. The entire plan of every human seems to begin with “when I’m rich…” This type of thinking stamps us and makes us horde the little money we can get our hands on. Once people get an idea to invest the money they worked so hard to get, they only want to think about the profit they can get and never think of the losses. There is a constant when trading any equity or options and that is there are never 100% profitable trades. Every trader will lose money from time to time. The sooner the trader can come to terms with that, the better they will succeed. We lose money because we do not plan for the worst case scenarios. Traders can control the amount of money they wish to risk on any given trade. They also have the power to remove themselves from the trade when it goes against them.

 

Risk/Reward Management

Traders have the ability to setup a preset amount to risk on any given trade to limit the downside potential. If a downside is calculated, an upside can be calculated as well. Trainers at Wizetrade suggest setting a Risk/Reward Ratio of 1:1.5 or better for every trade. This means for every $1 at risk, you will shoot for $1.50 profit. If you are wrong 50% of the time and you use this method, you will come out ahead. The amount at risk will vary depending on how much money is at risk and the dollar amount the stock moves within any given day.

 

Stock brokers give several tools to their clients to help with limiting risk on trades. The best tool available is a Stop Loss. This is a pending order below the price a trader entered a trade that will execute if that price is hit. The intent is to limit the downside potential and get a trader out of a losing trade.

Conclusion

            Learning the options market is only a piece of the puzzle. Once the majority of pieces are put together, we start to see the entire image. Don’t lose sight of your individual goals and work to achieve them.  

 

Tim Truelove

National Trainer II, Wizetrade Options