RadioActiveTrading Blog

Q: During the course of your seminars you talk about the “risk free rate of return” and its impact on options when comparing them to stock, long calls and married puts…could you help me understand how the “risk free rate of return impacts the comparison?

A: Let’s take a look at a comparison between the Jan 2012 $60 call, and the Jan 2012 $60 married put.

The $60 call is trading at $6.00 X $6.50. You could probably get ‘in the spread’ with a limit order, but you probably won’t get it low as $6.00… maybe more like $6.20 or $6.30. With me so far?

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Q: When you close a position, do you sell the individual legs? i.e. Sell to close the stock at the lower price and then you sell to close the (protective/married) put instead of exercising the put at the higher strike price?

A: If you are looking to liquidate a Married Put position and the put still has a few months to expiration, it will always be better to Sell to Close the Stock and Sell to Close the Put, rather than simply exercising the Put option.

Why? (more…)

Wanna hear Kurt Frankenberg live on the radio??? …Your in luck, we have archives of the radio shows available on the http://www.radioactivetrading.com/ site now.

If you want to join in live, just go to castlerockradio.com every Wednesday at 12 noon Eastern time.

Here are links to the archives… (you can use these as podcasts as well, if you don’t have the time to listen now but want to take them with you on your iPod)

Its_Your_Money_4_14_10.mp3

Its_Your_Money_4_21_10.mp3

Its_Your_Money_4_28_10.mp3

Its_Your_Money_5_5_10.mp3

Its_Your_Money_5_12_10.mp3

Good Morning! In today’s email/blog look for these three things:

1. An invite to the twice-weekly live trading Webinar,
2. A trading lesson about mental stability that is sure to change your life if you ‘get’ it, and
3. Links to two very brief videos that will entertain AND teach one of several ways to take a trade from low risk to NO risk.

Ready?

Today I’d like to chat a little bit about those two tiny gremlins that steal your money and wreck your trading…

FEAR and GREED.

Before we explore how to exterminate these little fellers forever, let me invite you to take a look at one short, 3 1/2 minute video. This video will not show the mechanics of “BULLETPROOFING” your stock… like my free Webinar held every Tuesday and Thursday at 12:00 noon EDT does… but it WILL show the effect that bulletproof trading has on your attitude.
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Ah, just reveling in the morning after the FORT - Foundations Of RadioActive Trading Seminar. Here’s a question that came up, and that merits a good answer:

“Aren’t protective puts EXPENSIVE?”

Well… yes and no. I mean, they do cost money. The question should be phrased more like this: “Are protective puts WORTH what they COST?”

Better question, I think. Because guess what - the benefits FAR outweigh the costs. Plus, the put option may actually become a source of income… (more…)

That’s right… I’ll say it. Married puts are better than covered calls, as short- OR long-term trading strategy.

I WOULD say that no one else does… but a lot of folks have jumped on the bandwagon recently and are beginning to teach the benefits of married puts. Welcome to the club

SO! Ready to count ‘em off? Here goes: (more…)

So I just finished watching a “chick flick” with my lovely wife… sigh. GOTTA do that sometimes …but I actually got something out of it beside brownie points! I actually got a recap on three of the most important decisions a trader MUST make. Intrigued? Here we go… The show was called Julie and Julia. It’s a true story about a modern woman that makes a decision to follow Julia Childs’ 524 recipes and do it in a year. Every day, she posts to a blog about her experiences, her successes, her challenges, and her failures. (more…)

Critics Question: On March 21st, Google was at $397. I bought 1000 of the JAN 2010 350 Calls for $73. Today it’s worth over $240,000…The same $73,000 would have bought me 200 shares of Google and the 420 strike put option was a ton of money. But today the put is worthless and would it not just take away alot of profits??

RadioActiveTrading Staff Answer: Although Married Puts and Long Calls seem to have the same risk/reward profile, Long Call positions can be over traded and take on too much risk. Yes, the GOOG position worked out, but we never know the future. Here is a different example of how the Married Put would have been a better trade compared to a Long Call position: (more…)

You have to decide for yourself if putting the time and effort into a married put trading strategy is “worth your time”. But you’re not alone! Investors have contacted us with similar concerns and questions. They want to know if trading any strategy themselves is going to be better than just buying into an index ETF and/or better return than their “advisor” can do for them. (more…)

Today, you get to look over my shoulder and read my mail… and see one of the BIGGEST reasons why the covered call selling crowd is DEFECTING… we’re talking about a mass exodus… and learning how to trade a much safer, much better options trading strategy.

Cari Houston (C.H.), a covered call seller, called me up and asked me to give her proof that she should trade married puts instead of covered calls. She also wanted me to critique of her two covered call trades and show her how she might have done better. (more…)