The Wizetrade Options Blog

So often traders can become concerned with news & analysis about the economy and the markets. So how much does it really matter? Well if we take the last couple of weeks in the market, there have been a lot of news reports that have come out both positive and negative. Retail, automakers, housing, mortgages. Some reports deliver mixed messages (for example, today new homes are up but so are foreclosures) so how do we know if it's going to impact stocks positively or negatively? Well the truth is that we don't know what influence news is going to have. What's most important is that we pay attention to the charts knowing when the news is coming out and what sectors news events will influence. It's also important to realize that some news influences are longer lasting than others.

Overall, one should familiarize themselves with potential news that can affect your trades. I regularly use forexfactory.com and nasdaq.com to track what news announcements are coming out and to remind me what the news reports are. I'm not suggesting you have to memorize all of this information. I've been doing this for a few years and I still have to look up the news events definitions to remember what they're meant to tell us. What I don't spend a lot of time focusing on is the specific results. For example, today the markets received Crude Oil Inventory numbers. The only thing that I focused on is that inventories were down which results in a lower supply. Supply is important because it means there is less available for the demand. That has resulted in increased prices in stocks like XOM, USO and RIG. Of course, if you were looking at the charts after the news, you would be able to interpret that same information based on the fact that the volume surged in & and the angle and separation ran to the upside. By the look of the trend developing on USO (United States Oil Fund) over the last few weeks, the demand is stepping up in comparison to the supply. It's just helpful to realize that the supply really is going down. That's what the news confirms for me.

So concentrate on the charts, know when news is coming out so that you can be properly poised, and don't worry about being absorbed into the details. And if you watch Wizetrade TV you can get a lot of the necessary details about what worth knowing

Happy Trading!!

Angie C.

We purchase insurance for our cars, homes, and health, but many traders are not aware of using options as insurance for their investments. With the recent 35% gains in the stock market traders should definitely be considering options as a tool to protect these gains in their underlying stocks positions. Options strategies that are considered insurance protection are the long put and covered call. The long put is a debit trade were you are insuring the underlying stock position for a small amount of premium paid for doing so. You can purchase this insurance for the length of time you plan on being in the trade or you can purchase this insurance month to month. The covered call is a strategy where you write a call against your underlying stock position and receive a credit for "renting" your stock. Go to the training on demand in the WTV player to find the training for the long put and the covered call strategy. If we have a pullback in the market these options strategies can provide a small amount of income while awaiting a market recovery.

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