Types of Traders

There are many different types of traders out there, before entering the market for yourself, you may want to consider what type of trading you would be comfortable with. The different types of traders are:

1. Trend Traders

These traders attempt to buy a stock that is going up and hold onto it until it starts going down. The best part about this strategy is that it takes a relatively short amount of time to manage it. Trend traders could be in a stock for days or years, depending on how well the stock is doing, the idea here is, why kill a good thing.

2. Swing and Day Traders

Both swing and day traders attempt to catch the short movements in the stock market. It involves being much more active in your account and having to pay closer attention to patterns and other short term indicators. The great thing about these strategies is that you make a profit or loss fast and it can add up over time.

3. Option Trading

Similar to swing trading option trading attempts to make money from the stock market in a short term time period. The only difference is that with options you have the potential to explode your profits. A relatively small move in the price of the stock could mean a huge move in the option.

4. Option Seller

Option sellers on the other hand attempt to sell options that they believe will become worthless over time. This way they collect the premium up front and when the option hopefully expires in the future they are in no obligation to do anything. Option sellers do not attempt to hit the huge home runs, but try to make a good return over time by compound interest. These are the most popular ways to trade stocks. All traders will have to find out which strategy fits them the best.

Trade Idea – BHP – WPL- LGL Calendar Spreads

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 please call or email Eden Hage on 1300 368 316 or info@TotalTrader.com.au.

For full information in regards to this trade including entry levels, please call or email Eden Hage on 1300 368 316 or info@TotalTrader.com.au

RIO Ratio Put Spread – Great Risk vs. Reward

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For full information in regards to this trade including entry levels, please call or email Eden Hage on 1300 368 316 or info@TotalTrader.com.au

Options Income Strategy

How the Income Strategy works:

Step 1: Sell Puts: This is how you buy the shares. If you are happy to buy the shares at the market level sell an at-the-money put. This means your breakeven on the share purchase is lower than the current share price. This is demonstrated in the below examples. If the the share price is above the strike price at expiry you receive the premium and look to sell another put. If the share price is below the strike price at expiry you are exercise and buy the shares (Step 2)

Step 2: Buy Shares: Once you are exercised on the sold puts you buy the shares at the strike price. Immediately sell calls (Step 3)

Step 3: Sell Call: Sell the calls at a strike price above your breakeven and receive a premium. Even if you are exercised sell the shares and lock in a profit.

If you still wish to trade that share then look at sell at put. The aim is to always be selling premium and look to receive income every month either through sold puts and sold calls.

This strategy can be implemented with protection (buy puts) which is a more conservative approach. You do not currently use protection on your covered call portfolio but we could look at this in the future if you decide to.

If you would like the to find our more details about this trade including strike prices and risks or about options tranding in general please contact Eden Hage on 1300 368 316 or eden.hage@stonebridgegroup.com.au

BHP Long-Dated Calendar Spread

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If you would like the to find our more info about options tranding in general please contact Eden Hage on 1300 368 316 or  email info@totaltrader.com.au

Tricom Today 29-1-09

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The market is up 29 underperforming the 63 point rise predicted by the SFE Futures this morning. Resources leading the way up 1.8% – BHP up 4.6% and RIO down 1.3%. Lots of RIO research this morning discussing the options for a capital raising after the announcement yesterday that a rights issue was a possibility. Financials up 1.0% – banks all up 1% or 2% – NAB outperforming up 3.0%. Industrials lagging – down 1.1% – Wesfarmers down 3.3% announcing a retail entitlement offer.