General Stock Ideas

[Market_Fest4]

I'm an options fiend! It's the only way to play.

It's really not that complicated. You know you can buy a call option on a stock that you think is going up.

What I prefer to do is buy a call spread. This simply means you buy the call you like and simultaneously sell a higher call against the one you bought. You enter the trade with a debit limit (the difference between what you pay and what you recieve for selling a higher strike call) that you choose.

This strategy does two things:
1. It caps your maximum gain to the difference between the strike price of the call you bought verses the one you sold. But it
2. Substantially lowers the entry price of the position. That benefits you if you're wrong.

I use this strategy for short term plays, like if I expect a bounce move and the option expires in a few days.

If you really like a stock for the long haul, it's better to buy a call Leap (longer than 6 months till it expires) without selling a call against it. That way your upside is not capped.

I love options. I recommend them as the safest way to not lose your ass on any single trade. If you are curious, Options Action, on CNBC, is a great way to learn about them.
Good luck.
MF4