Option Trading Tips on CCG

Forbes contributor, StockOptionChannel.com, came out with a post a few days ago that I felt compelled to expand upon for you.  The contributor has a wealth of knowledge, offers solid analysis (most of the time), and sound option trading tips on how to boost your returns with option trading.  But, this recent post is off the mark, in my opinion.

 Option Trading Tips on CCG Covered Call

First, read the beginning of the post, “How To YieldBoost Campus Crest Communities To 16.3% Using Options” –

Shareholders of Campus Crest Communities, Inc. (NYSE: CCG) looking to boost their income beyond the stock’s 7.9% annualized dividend yield can sell the December covered call at the $10 strike and collect the premium based on the 25 cents bid, which annualizes to an additional 8.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 16.3% annualized rate in the scenario where the stock is not called away. Any upside above $10 would be lost if the stock rises there and is called away, but CCG shares would have to climb 19.

 

CCG+Dividend+History+Chart

Option trading tips on how to boost returns along with CCG’s dividend history.

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Sharpening Your Axe

When I was a kid, my dad told me this story about some young lumberjack wandered into a logging camp inquiring about a job. He got hired on and pretty soon he worked his way up to being one of the top lumberjacks in his camp. He got so good, that lumberjacks used to bet him money over who could chop down the most trees in a given day. He took every challenge and won.

Over time, news spread to the surrounding camps and new challengers came calling. He took every challenge and, again, won every challenge by cutting down more trees than any other lumberjack in the surrounding area.

With no one left to challenge him, he settled into life in the logging camp.

One day, an old man came looking for him and challenged him.

The big, burly young lumberjack laughed and said he didn’t have a chance and to go back home before he got hurt.

The old man pulled out a wad of money and reissued his challenge and bet him dollar for dollar that he could chop down more trees than him during a day’s work.

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7 Keys to Trading Stocks with a Bull Flag Pattern

Learn the 7 components to trading stocks with the Bull Flag Pattern.

The Bull Flag Pattern is a reliable continuation pattern that can be used in trading stocks if you understand the 7 key components to trade it successfully. Courtesy of StockCharts.com

Price patterns are nothing new when it comes to trading in the market but some traders rely on price patterns as their core method in trading stocks.  A price pattern appears after a stock’s price enters a period of price contraction and begins trading between high and low prices over a period of time.  When analyzing these charts, experts look for certain patterns to form that indicate it might be a good time to buy or sell a certain security when the pattern breaks.  For trading price trends, one type of pattern that yields reliable results is a continuation pattern such as the bull flag continuation pattern.

A bull flag pattern on a stock analysis chart forms when there is an active upward trend in a security; this is then followed by a period of slightly downward activity (called a pause, because it is the security markets natural attempt at correction that is often seen with an active upward or downward trend), and this is often in turn followed by the resumption of the same active upward price trend.

 KEY COMPONENTS OF A BULL FLAG PATTERN

Uptrend

In order to be a true continuation pattern, it is first required to see the establishment of a prior trend. In the case of a bull flag pattern this is always in the upward direction. There will also be evidence of a sharp move or advance often based on a heavy volume of trading for the security (sometimes it can contain small gaps also). This will be the first of two advances in a typical bull flag pattern; the second one will come after the flag pattern emerges.

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Stock Trading Tips on How to Spot Accumulation

A good stock trading tip is to look for well-formed base patterns in potential stock trades for higher returns. Base patterns form the launching pad that runaway stocks use as a platform to explode into higher price values.

Consider this lesson from Investors.com:

“When scouting for excellent base patterns, focus on those that have more up weeks in heavy volume than down weeks in above-average trade. If that’s the case, buyers are in control, not sellers.

A stock’s price action is important, but a move means a lot more when it’s accompanied by big volume. This combination can give you clues about the future direction of a stock.

Herbalife (HLF) forms a classic base pattern as accumulation is revealed through the stock’s volume.

 

CAN SLIM investing involves identifying stocks being scooped up by the big money. So focus on stocks in bases with more up weeks in high turnover than down weeks in big volume. They’re the ones being accumulated by professional investors, such as mutual funds, banks, insurers and hedge funds.

On the flip side, bases with more down weeks in big turnover than up weeks tell you that they’re under distribution, or being sold heavily by institutions.

Professionals don’t always buy at new highs. Some do their shopping during consolidation periods, which create various chart patterns.

Institutions will take weeks or months to build a full position into a stock. Their buying leaves footprints in the form of tall volume bars…

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8 Reasons to Trade Exchange Traded Funds Over Stocks

Stock market, Bull vs Bear Markets

Exchange Traded Funds have alot to offer over individual stocks (Flickr.com).

The stock market and volatility go hand-in-hand in today’s 21st century stock market but Exchange Traded Funds, ETF’s, have helped smooth over some of the market’s peaks and valleys. If you’re goal is steady gains then you’d be hard-pressed to find a better instrument to help you along that path. If you’ve never considered ETF’s as part of your overall strategy, then you may reconsider after reading about some of the unique advantages that they offer to help your trading achieve smoother performance without the sleepless nights.

 Access to Alternative Markets

ETF’s give you access to markets that would otherwise be out of your reach. Gold, currencies, copper, timberland, energy, and other investment classes are available to you through ETF’s instead of you having to trade the Forex, store physical assets, or pay margin costs in the Futures market. Plus, you can hedge portfolio using ETF’s but without the costs of rolling over futures contracts or paying the wide bid/ask spread in the Forex.

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