Call Option Trading Secrets » Strategy

Exit Strategy: Moving on

admin — Sun, 24 Jan 2010 17:25:39 +0000

No one likes to think of a scenario in which they may have to shut down their business, or leave it in other hands. However, planning for such exigencies is an important aspect of business. Charting out an exit strategy will prepare you for the worst, and enable you to deal with a lot of difficult questions – How do you recover your investment if you are making a personal exit? How do you decide if a valuation is fair in case you need to sell out? Or, when does filing for bankruptcy become the best option?

As far as possible, an exit strategy must cover all scenarios, expected and unexpected, whether it involves transferring the reins of your business to the younger generation or jumping off a sinking boat. Plan your company’s exit strategy ahead of time to avoid last minute clashes with employees, angel investors and others who might have an interest in your enterprise. These are some of the things you need to think about:

A succession plan: Roping in your children to run the business after you are gone, cannot be done overnight. A succession plan makes all the difference to how your children become a part of your business: by default or after careful initiation! If the latter is on your mind, devise a well laid out plan – decide on a minimum stint that they must complete in order to learn the way your business is run, and more importantly decide if it is something they would like to get involved with at all!

A great offer: Over the years, other options might open up for you and selling your existing business might seem like a good idea. But selling can be done only once and it is imperative that you get the right price. You will also have to deal with objections from people who are part of your business. To get a great price, sell when things are looking up. You could sell to an interested company, make a public offering or offer your stake to your employees. You will need to hire legal and financial professionals to conduct the valuation of your company so you get a fair deal on a sale.

Dying out: In the unhappy event of inevitable closure, be generous to yourself. Take home a bigger pay check or bonus. This will reduce the amount of reinvestment your business sees and will help it die a slow death. Of course, you will have to bear the burden of increased personal taxes.

Selling assets: Another possibility is to sell all your company’s fixed assets. Ideally, liquidation should be your last option, and should be resorted to only when you feel that the business does not have too many prospects. If your company’s exit strategy has made provisions for such an eventuality, there are chances that you will also invest in fixed assets more judiciously.

Going bust: If you see the writing on the wall, there’s nothing to do but file for bankruptcy. The legalities differ depending on the nature of the company’s ownership. A company that is bankrupt is faced with two options – liquidation or reorganization.

Venture Plan Consulting offers assistance with all aspects of entrepreneurship including how to formulate an exit strategy.. “Exit Strategy Planning: Grooming Your Business for Sale or Succession”, by John Hawkey, you go about the planning process yourself.

It is necessary to have an exit strategy ready for the short and the long term. Being prepared for any situation, adverse and otherwise, will help you retain control over your investment. A ready- to-use exit strategy is indispensable from this point of view.

The Secrets Of Strategy – Part 2 Of 2

admin — Wed, 13 Jan 2010 17:44:10 +0000

Of course you’ve heard that when you do what you’ve always done, you’ll likely get what you’ve always got. In this case that means playing the tactical game: coming up with acceptable–or worse–comfortable options and executing them as time permits. Likely, what you’ll get is business as usual, and things will be… well, they’ll be fine.
But “fine” may not be what you’re after, and you are probably reading a series called “How to Create Strategies That Work” so you can do better — perhaps much better…
And if you are willing to take some time and do your homework: the research, inquiry, analysis, synthesis, and the activation of strategy — you can add dramatically more power to each one of your individual tactics, and potentially revolutionize your entire business.
In the beginning of this series I showed you how to start the process of selecting a market-dominating business and marketing strategy.
The first four steps are:
- Set your vision
- Gather environmental and competitive intelligence
- Take stock of your organization’s strengths and weaknesses
- Answer the Global Strategy Question
I covered those in The Secrets of Strategy, Part 1. In this article I’m going to cover the next four steps:
- Establish decisive objectives
- Rate and rank your “SWOTs”
- Match your internal and external factors to identify strategic alternatives
- Select the highest-impact strategies for implementation
Establish Decisive Objectives
Strategy is contextual. This means you should not make any kind of strategic decision–choosing strategy A over Strategy B, for instance — without first setting a context with Decisive Objectives.
The word decisive is from the Latin decidere, which means to cut off. Decisive objectives are the goals that cut off irrelevant business opportunities and distracting details. They define the boundaries of your company’s efforts and direction, and establish the measures by which you will gauge your success.
This step is to select company-defining goals, the attainment of which will mean your vision has started to become a reality. These objectives or goals should relate to the following:
In what markets will you do business?
What market share will you have? Will you be a marginal player with a small percentage, a big player with a significant portion of the market, or will you dominate your market and crush all competition?
Where will you operate geographically? This question ties back to the issue of market share; you might dominate the market locally but be a small player nationally.
How much revenue and profit will you earn? Larger revenue goals will have different strategic needs.
What impact will your business have on your industry, your community, your world?
How will you exit your business? Will you run the business and eventually pass it on to family members? Will you sell it privately? Will you go public?
These are examples of the kinds of goals which shape your company. The decisive objectives create the context for the strategy alternatives you generate.
Rate and rank your “SWOTs”
Previously, you analyzed your external environment and internal strengths and weaknesses. Now rate and rank the most important factors.
Evaluate each external factor: is it an opportunity to be taken advantage of, a threat to be defended against, or is simply something neutral you can safely ignore? Do the same for your internal factors: are they strengths to capitalize upon, weaknesses which much be bolstered or outsourced, or neutral conditions?
Using your Decisive Objectives as a guide, select amongst the potential opportunities, threats, strengths and weaknesses, those factors you consider critical to the success of your business. (Ignore the neutral factors.)
Group the critical factors into internal and external. Rate each internal factor from .01 to .99 based on its perceived importance to your business. The total should add up to 1.0. Do the same for the external factors.
Select the top five to ten internal factors and external factors for matching.
Match your internal and external factors to identify strategic alternatives
Matching combines each internal factor with an external factor, generating a potentially relevant strategy. A software manufacturer might match an internal strength such as flexibility with an external opportunity of a new law in a related industry, yielding a strategic alternative to reconfigure the software and provide solutions to the new legal requirements.
Or, a duck farmer might match his internal strength of breeding expertise with an external opportunity demanding low-fat, high-protein foods to yield a strategy selling low- fat duck.
Strengths are matched with opportunities to create SO strategies. These are generally your strongest, highest leverage options. Strengths match with threats to create ST strategies. These use your natural assets to minimize external threats to existing revenue streams and your current competitive position. But since the best defense is often a strong offense, you may find yourself reverting to an SO strategy — typically a better alternative.
WO strategies use external opportunities to reduce the impact of internal weaknesses. Of course, you may simply choose to put your resources into areas of strength and outsource weak factors.
WT strategies are the weakest of all: defensive approaches designed to minimize internal weaknesses or external threats. Sometimes necessary to protect weakening revenue streams, there are often other, more powerful approaches that take better advantage of company strengths.
This process is often called SWOT, named for the four types of internal and external factors. I prefer to call it SOT, since the most powerful options will not pay much attention to weaknesses. In our business philosophy you will gain more ground more quickly by amplifying and exploiting your strengths and outsourcing — or ignoring — the areas in which you are weak.
Select specific strategies for implementation
At this point many people choose to intuitively select which strategies to pursue. Others may prefer to bring rigor to the ranking process. This final step combines your various subjective analyses into a defined framework, giving each strategy a strategic impact score.
Compare your new strategic alternatives to your list of critical factors to find those factors affected by each strategy. For each match, rank the attractiveness of the strategy relative to the factor from 1-4 (1-not attractive, 2-somewhat attractive, 3-reasonably attractive, 4-highly attractive) and multiply it by the factor’s rating (.01 – .99). Sum all the scores for that strategy into a total “strategic impact score.”
Lastly, select your go-forward strategies based on the highest strategic impact scores.
This is a demanding process with many steps, but it is well worth the effort. The strategies you create will take greatest of advantage of your strengths and opportunities, while protecting your company most effectively against threats and weaknesses. They will provide your company with leverage to make the most of your assets, your competitive position and your markets, all while insuring your strategies are consistent with your company’s vision and goals.
Important notice for strategy-minded entrepreneurs:
Strategy creation is a long road to hoe, and goes much more smoothly when you know what questions to ask and in what sequence. To make it easier for you and your senior team, I’ve created the Growth Strategy Roadmap.
This program of flowcharts, questions, checklists, and detailed processes takes you through the entire progression of evaluating your external and internal environments, and provides all the steps and forms necessary to generate matched options, and rate, rank and select a high-leverage, high-growth strategy.
(c) Copyright Paul Lemberg. All rights reserved

Forex Options Trading – What is Forex? (part 1 of 2)

admin — Thu, 07 Jan 2010 17:25:11 +0000

Forex or foreign Exchange or FX involves the buying and selling of one currency against another currency. They are always traded in pairs e.g. EUR/USD, USD/JPY. So when you are buying Euro dollars (EUR) you are also selling the US dollars (USD) in exchange for the Euro dollars. If you want to buy US dollars then you would sell the Euro dollars in exchange for buying the US dollars.

An example that we would encounter frequently is when we travel overseas and need to exchange the local currency for the foreign destination currency and we would head to the local money changer or bank to buy the foreign currency. This is a good example that we are familiar with.

By buying and selling currencies at the money changer or bank we are already involved in this huge foreign exchange market. Banks and central banks, investment funds, hedge funds, exporters and importers, companies and retail forex traders are among the main participants in the forex market.

Banks trade to generate profits and also act as buyers and sellers of one currency against another for their clients trading and commercial transaction. While central banks buy and sell currencies to hold as reserves and protect the reserves. They also act to moderate their country’s currency strength to facilitate reasonable terms of trade in the international markets for their exports and imports.

Investment funds have a percentage of their portfolio in the forex market for many reasons like diversification, hedging, etc. While most hedge funds will speculate on currencies as it is the biggest market in the world thus able to accommodate their large trading size which is quite difficult to do in the equities or futures market.

To be continue.. at – Forex Options Trading – What is Forex? (Part 2 of 2)

A Trading Strategy That Consistently Beats All Major Indexes

admin — Tue, 05 Jan 2010 17:27:31 +0000

Are you looking to outperform the market and optimize your profits but are not sure how to pick the right stocks? Has investing become a chore? Do you find yourself investing in hot stocks after they have made their big move? Would you like to learn how I increased my portfolio by over 400% in under 7 years? Do you want to discover how I have outperformed the market over the past 3 years by a margin of 5 to 1?

Do You Hate Research? . . . I do!

I have always wanted to find an investment strategy that made sense. An investment strategy in which I do not need to know the intricacies of the market, predict market trends or follow specific stocks. How can I get the inside information of what is hot before the rest of the market knows? I can’t. Nor do I need to.

Plus, I don’t have that kind of time to commit to in-depth research. Like you, I have a regular job that I need to devote my time to. I am not a day trader; nor do I want to spend all of my free time on the computer doing research. Always following the stock market and getting stock quotes is not how I want to spend my free time.

I Avoid Individual Stocks . . . they are too unreliable!

Everybody wants to buy low and sell high. While millions of people do make money this way (and many millions loose money), I have found an easier and more effective way to use the market to my advantage. I do not trade in stocks. I do what I can to avoid individual stocks. And I consistently beat the market . . . month after month after month.

If not stocks, what’s the alternative?

Like many people, I got heavily involved in the stock market in the mid to late Nineties. Tech stocks were going through the roof and I, like everybody else, wanted a part of the action. It seemed an easy way to make money. Everybody was getting rich. You did not need a special investment strategy to beat the market.

During this time, I engrossed myself in the financial markets. I wanted to learn as much as I could without giving up my day job. I was trying to find the next best tech stock, IPOs and the occasional pre-IPO offering. But it was not until I discovered options trading that I discovered an investment strategy (The Yager Trading Strategy) that can work in any kind of market . . . Bull, Bear or stagnant.

That’s right…OPTION trading!

And I am not talking about stock options or writing covered calls. Options trading…I started selling options on S&P futures, using different methods and trading strategies. And I did well. VERY well.

Between July 1998 and January 2000 (a span of 18 months), from my option trading system, I turned an initial $25,000 investment into $167,615. That’s over 670% increase. And this was not paper money where you buy a stock and it has a certain listed value. This was real, taxed income. Profits collected on a monthly basis.

Market fluctuations and volatility have diminished greatly since then…reducing the premiums. Those types of returns are no longer available, but the option trading strategy is still very sound. I still consistently beat the market. Even the years the DJIA, Nasdaq and S&P were all down, I posted more than a 22% gain.

Learn the option trading strategy or see how to make money with this strategy. I describe the strategy and show actual recent trades on www.yagerinvesting.com. The information is FREE. No subscription required. This is a method for risk capital only.

For the preceding 12 months (May ‘06 through April ‘07) this is how my strategy, The Yager Trading Strategy, performed:

DJIA……………………..20.3%

NASDAQ………………..14.7%

S & P 500………………..17.3%

Yager Trading Strategy….32.2%

Learn the strategy for FREE.

http://www.yagerinvesting.com

adam@yagerinvesting.com

Forex Options Trading – 9 Reasons on Why You Must Trade Forex (part 1 of 2)

admin — Tue, 05 Jan 2010 17:27:26 +0000

In the late 90’s, many financial company dominated the Forex Exchange Market. In the past several years the Forex Exchange Market has show a dramatic development. Nowadays private company are offering access to the Forex Market via internet data feed trading platform.

Private investors are going into Forex Market, with access to the same market data and tools used by bank, hedge funds company and professional traders.

Below here is 9 reason on why you must trade Forex.

1. Round the clock trading

The forex market is unique in that it is open 24 hours nearly 7 days a week. The market opens when the New Zealand and Australia markets open and closes when the US market closes. Due to the difference in time zone, it would seem that the forex markets are opened always.

2. No need to choose from too many counters

Unlike equities, in forex you would only need to understand the minimum of 1 pair of currencies and concentrate on it. Whereas for stocks and shares, before you can start understanding the equity you would have to sieve through thousands of companies before you can start to concentrate on trading them.

3. Liquidity

As the forex market is the biggest around, it is very liquid. Average daily turnover rose to $3.2 trillion in April 2007. Given its size, buyers and sellers can easily get their orders matched swiftly and easily. Whereas in the equity markets, one would have to wait for their orders to be matched especially if it concerns a stock that is not very well traded.

4. Good Leverage

In forex, you are able to obtain leverage up to 200:1 or even more depending on the broker. This means a minimum deposit of USD 500 can allow a trader to open a position size of 100,000 to trade. No other markets give you this advantage. However, do note that leverage can be a double-edged sword too.

Stay tune to the Forex Options Trading – 9 Reasons on Why You Must Trade Forex (Part 2 of 2)

The Ultimate Stock Options Trading Strategies

admin — Mon, 04 Jan 2010 17:25:10 +0000

Are you interested in option stock trading? Then you must be interested in option stock trading strategies. To understand stock options better lets see a simple dictionary definition.
Strategy can be defined as a skill in managing or planning, especially by using stratagems. The words managing or planning using stratagems to achieve a particular end or objective is quite useful in our desire to apply this definition to the investment market.
The ability to pick the right stock or group of stocks is vital. Equally vital is the art of making the most possible return on the chosen investment possibility. This is where you need your strategy or game plan. So with the right opportunity but wrong strategy can still lead to risky investment, loss of profits an capital. These underlies the fact the proper knowledge of option stock trading strategies are important.
The desire of the stock investor, his style and depth of research and the personal preference of the stock broker would all contribute to the final selection of stock options would prefer and consider necessary. The process of selection involves the data that are available and preferred by an investor in options stock trading. The sources of data are wide and usually consists of charts, indicators, news, reviews, tips and oscillators.
Each investor in option stocks trading has his own preferred stock choosing process. Each would determine how he undergoes the selection process. Once the selection has been made viable option stock trading strategies would have to be considered and a strategy selected.
A stock option investor has some desired expectation for any opportunity chosen and implemented. A trading strategy that maximally suits the desired expectation should be selected.
Obviously the best strategy would be one that achieves the desired level of returns while still offering the least amount of risk and best protection on investment possible. Every option stock trading opportunity is unique with different variables attached to it and thus would require that each opportunity should have a different strategy that best suits the particular strategy. An obvious popular option stock trading strategy is the selection of stock that is believed to be on the rise, or that is expected to increase in price.
This directional play allows investors to profit as the face value of the stock or portfolio goes up. Each investor should take time to select his stock or trading opportunity and the best available strategy to execute it.

Forex Options Trading – What is Forex? (part 2 of 2)

admin — Sat, 02 Jan 2010 18:15:45 +0000

Companies, exporters and importers are also very much involved in the forex market as buying and selling of products takes place all over the world thus buying and selling of currencies to facilitate and complete all these transactions are needed. An exporter in the USA might have sold his products to a company in Europe in US dollars so the importer has to buy US dollars while selling his Euro dollars to pay for the products from the USA. Or a company may need certain parts for their equipment which is not available locally so they have to order from overseas.

This process requires the company to purchase the supplier’s currency so as to pay for the parts.

Lastly, we have the retail traders who have chosen the forex market above others like equities, commodities, etc. to do our trading or investments so as to make some profit. This is a growing segment due to the prevalence and accessibility of the internet which allows brokers to provide trading platforms and continuous price data feed to the small players globally. The low and affordable cost of the internet also helped many to participate in this growing phenomena.

Brokers are going online with their own platforms that allow easy and simple to use trading and also to provide education to these small retail traders. The mushrooming numbers of brokers in recent years also act to lower cost (wonder of competition) for the small retails traders.

Most brokers do not charge commission and the spreads for major trading currencies have also narrowed tremendously. There is no better time than now to start your foray into forex trading.

Forex Options Trading – Trade Forex Options in 7 Easy Steps!

admin — Fri, 01 Jan 2010 05:24:53 +0000

FACT: 95% of forex trader do not know what is forex options, 4% of forex trader know what is forex options but they think that forex options was too complicated for them and only 1% use forex options for trading.

Why Forex Options? Options allow you to have the right but no obligation to either buy a call option or sell a put option which is an asset at the certain price as known as the strike price on the certain date too. Right in buying or selling the underlying asset, you will pay a premium upfront to the seller of the options, whether you choose to use it or exercise the right. It is all dependent upon the market movement at the time the options exipres.

I will show you What is Forex Options in 7 Easy steps….

What is a Call Options?

Call Option give the options holder, in return for paying a premium, the right but not the obligation to buy the underlying asset at a specified price within a specifie timeframe.

What is a Put Options?

Put Option give the option holder, in return for paying a premium, the right but not the obligation to sell the underlying asset at a specified price within a specific timeframe.

What is a Strike Price?

Strike price is prices at which an options holder cab buy or sell underlying instrument. Strike price are also called the exercise price.

What is a Value Date?

Value date is the date when the settlement of funds for a trade transaction will take place on your account. In Forex, the value is usually two banking days from when the trade is executed.

What is an Exercise Date?

You will exercise an option when you invoke the right to purchase or sell the underlying asset at the price stated in the option contract.

What is an Expiration Date?

The expiration date is the day which the option expires. Options that can only be exercised on the expiration date are called European options.

What is Forex Vanilla Option?

Forex Vanilla Option is an ordinary option with no special features unlike stock or future options.

As a Forex Options Trader myself, it is easy to take the advantage on the forex market. Even if the market move up or down, you will be able to profit from that. Different strategy will get different amount of premium.

As a saying… Past different from present, present different from future. Market undergoing change. Profitable strategies become detrimental. But Forex Option Trading always stay.

Forex Options Trading – How to Read Forex Price Quotes (part 1 of 3)

admin — Wed, 09 Dec 2009 18:31:21 +0000

When you start trading in the Foreign Exchange market, you will notice that the prices for either buying or selling a currency pair always come in a pair of price quotes. One is called the ‘Bid’ (or Sell) and the other is called the ‘Ask’ (or Buy). You will notice the same in any other investment/trading products (e.g. equities, commodities, etc.). The price that you buy a currency pair is reflected in the Ask price while the price that you sell a currency pair is reflected in the Bid price.

The Ask price or selling price of a currency pair is always the higher one in a price quote. While the Bid price or buying price is the price at which you buy the currency pair. What this means is that you will always buy at the higher price and sell at the lower price of a price quote.

You will notice that between the Bid and Ask price there is a difference and this difference is what we call the “Spread”. The spread is the cost of the trade or transaction. Usually this is the only cost for the trader as most forex brokers nowadays (due to competition on the internet) do not levy any additional commissions unlike when you are trading on other investment markets like equities, etc.

At the beginning it may seem confusing for a beginner as when we purchase something only 1 price is given to us. However, beginners just have to remember that you will always have to buy at the higher price of the 2 prices while selling a currency pair you would have to remember that it is the lower of the 2 prices. It doesn’t make sense for the broker to sell you at a lower price and then buy back from you at a higher price.

To be continue… on Forex Options Trading – How To Read FOREX Price Quotes (Part 2 of 3)

Forex Options Trading – How to Read Forex Price Quotes (part 2 of 3)

admin — Wed, 09 Dec 2009 18:31:18 +0000

To read a forex price quote consisting of two different currencies you have to note that the first currency is known as the base currency while the second currency is called the quote currency. Another point of note is that the first currency value is always 1 (one).

To further illustrate, the price quote or exchange rate tells us how much of the quote currency we must pay to obtain one unit of the base currency. Likewise. The price quote or exchange rate tells us how much we will receive in the quote currency by selling one unit of the base currency.

For example, if you wanted to buy the EUR/USD a price quote of EUR/USD of 1.3550 means that 1 EURO dollar (EUR) is equal to 1.3550 US dollars (USD). This means that to buy 1 EURO dollar (EUR), you would have to pay 1.3550 US dollars (USD).

In the above case, if the currency pair’s prices rises (i.e. the EUR/USD price goes up) it would mean that the EURO dollar (EUR) has appreciated against the US dollar (USD) which has weakened. If the EUR/USD has now risen to 1.3850 from 1.3550 it will mean that the EURO dollar is stronger now compared to the US dollar (USD) as 1 EURO dollar can buy more US dollars (USD) than before.

Likewise if the EUR/USD has now dropped to 1.3350 from 1.3550 it will mean that the EURO dollar has become weaker relative to the US dollars as 1 EURO dollar now can only purchase lesser US dollars

To be continue… on Forex Options Trading – How To Read FOREX Price Quotes (Part 3 of 3)