Well, I’ve been laying low on the stock reports because its been flat-lining lately. Not much movement lately… And when there is no movement you can’t buy or sell. Hmmm…. other things… we’re about to release our first product. It is a program similiar to treesize but it is made specifically for Macintosh computers. If you’re unfamiliar with TreeSize then I’ll inform you… not about treesize but about wheresthefreespace. WherestheFreeSpace is a macintosh hard drive analysis tool that allows you to locate lost space.

      

A covered call allows you, as an owner of a stock, to sell at a specified price.

For instance, let’s say you buy 100 shares of NT and it’s trading at $3.21 and you write a covered call for December at a strike price of $4.00. If you are more than happy to sell at $4.00 and you don’t think it will ever get exercised… now’s the time to write a covered call.

1. You get the premium (let’s say $250) and get to keep the premium regardless of what happens.
2. Remember, you wrote it at $4.00, giving anyone who purchased a call the “option” to purchase the stock at $4.00.
• If it get’s to $4.50
1. You get to keep the $250 and you sell your stock at $4.00 giving you a gross of $400 + $250. And a net sell of $650 - $321 = $291.
• If it get’s to $3.00
  1. You get to keep the $250 and they never buy your stock… But it doesn’t matter… you sell it as a market order anyways

Worst Case Scenario: The stock tanks to $1.00 and you get to keep the premium but it doesn’t even begin to offset the loss

      

In the course of trying to figure out this futures game, I’m posting a little guideline to buying or selling Options.

When buying or selling options you have four choices stated below:

Buy to Open
Buy Calls to Open is the right to purchase a fixed number of shares, at a fixed price, before a specified date in the future from the seller (writer) of the option.
You would choose this option if you are looking to purchase an option. For instance, you think MSFT (currently trading at 25) will go to 30, so you go and buy the MSFT option using this buy to open option and hope to hit 30. In this case, you would “buy to open” a “call” and the price you would pay would be the “ask”.

Buy Puts to Open is the right to sell a fixed number of shares, at a fixed price, before a specified date in the future to the seller (writer) of the option.
You would also choose this option if you are looking to sell an option tha tyou think will go down. For instance, you think MSFT (currently trading at 25) will go to 20. So, you go and buy the MSFT option using this buy to open option and hope to hit 20. In this case, you would “buy to open” a “put” and the price you would pay would be the “ask”.

Sell to Open

Sell Calls to Open create an option position whereby the seller (writer) would receive premium income from the buyer in exchange for the obligation to sell/deliver a fixed number of shares, at a fixed price, for a specified amount of time to the buyer. You can only sell calls as an opening contract if the stock is long/purchased in the account before the sell.
You would also choose this option if you are looking to sell an option that you think will go down or stay the same. For instance, you currently own MSFT and it is currently trading at 25. You don’t think it will get to 30. So, you write an option and recieve a premium. Then, you hope it doesn’t get to that price. So, you go and write the MSFT option using this sell to open option and hope it stays the same or drops. In this case, you would “sellto open” a “call” and the price you would be asking for the “ask” price.

Sell to Open Puts create an option position whereby the seller (writer) would receive premium income from the buyer in exchange for the obligation to buy/receive a fixed number of shares, at a fixed price, for specified amount of time to the buyer.
You would also choose this option if you are looking to get a premium by promising a stock owner that you will buy shares at a specific price. For instance, you get paid a premium of $50, but the owner of the stock says, if the stock drops to 20, you have to pay me 25. Then, you hope it doesn’t get at or below 20. In this case, you would “sellto open” a “put” and the price you would be asking for the “bid” price.

Buy to Close
Buy a Call to Close will close out, terminate or offset the initial open contracts to the extent of the number of contracts closed out.
Note: Scottrade does not allow buying puts to close, because we do not allow selling puts as an opening transaction.

Sell to Close
Sell a Call to Close will close out, terminate or offset the initial open contracts to the extent of the number of contracts closed out.

      

I’ve just decided that going public starts before the IPO. If you are intersted in going public you need to act like a public company before you are public! Try sharing your sales reports to everyone in the company. Try holding yourself (the CEO) accountable for every move the company makes… good or bad. Let’s start doing that…

      

Well, I’ve learned something about the company that I’ve been executing my trades through. Aparently, if the underlying stock is $0.25 above the strike price at time of expiration, the system will automatically execute the trade. Additionally, if you buy the stock option and the stock starts going up, you can sell the option for more than you paid for it. But, you then loose the right to execute the contract.

I’ve also learned something else, if you want to execute the option before the expiration date, you can do so at anytime. Remember, a call option is the right to purchase a set amount of stocks on or before a specific date. But, you cannot place a “limit order” for a purchase price. For instance, here is an email that I sent and recieved from Scottrade.

—–Original Message—–
From: Scottrade Customer Support [mailto:support@scottrade.com]
Sent: Tuesday, June 07, 2005 6:28 PM
To: RJ Martino
Subject: RE: Acct: 53938090

Dear Mr. Martino,

Thank you for your email. Options cannot be exercised online. If you wish to exercise an option, you must contact your local branch office with your exercise request. There is no system to set your options to exercise when the underlying security reaches a particular price. The previous email reply was assuming that you wanted to sell your option contracts themselves, not exercise them.

Please let us know if you have any additional questions or comments.

Sincerely,
Kevin Kohler
National Service Center Broker

Scottrade, Inc.
Scottrade has been named Highest in Investor Satisfaction With Online Trading Services Five Times in a Row by J.D. Power and Associates. For award information, visit www.jdpower.com.

—–Original Message—–
From: RJ Martino [mailto:rjmartino@iprovonline.com]
Sent: Tuesday, June 07, 2005 5:14 PM
To: Scottrade Customer Support
Subject: RE: Acct: 53938090

I understand limit orders but I want to know how I can set a limit order to “execute” my options contract.

I want to execute one contract (.XECFH) if XEC reaches $42.00. How would I do that?

RJ Martino [rjmartino@iprovonline.com]
iProv, LLC [www.iProvOnline.com]
ETAS 551
2801 South University Avenue
Little Rock, AR 72204
ph. (501) 683-7229

      

Okay… I’ve had a couple of new software ideas. The first is a lot like TiVo… you program it once and then forget about it. Then, it works for you. This idea must be centralized on one company (eBay or Amazon). The idea allows a user to setup keyword searches, price limitations, ending soonest limits, etc. And searches eBay daily, hourly, etc. for you. You don’t have to spend your time searching, someone else is doing it for you. Nobody is going to take the market away from eBay for a while so we mine as well play off of it… rather than against it.

The other idea is a simpler idea but just capitalizes on the huge market of weight loss. It is a desktop application that allows a user to create dietary plans that have printable reports, restaurant menu style look so they can choose what they eat, and always produce reports to make sure they stay under the recommended eating requirements. The idea is to create a fairly simple product, flood it with information/data of currently avialable cookbooks, and sell it through radio advertising. This idea came after meeting with a client that wants a similar web application. I had a friend who once started a similar development and I always thought it was a great tool.