Stock Trading and the like

Submitted by A Wig That Knew... on July 27, 2006 - 5:04pm.

Posted in | A Wig That Knew You Were Staring At It's blog | delicious | digg | reddit | 237 reads »

A recent web release notes that it is not necessary to rely on dividend paying stocks to make dividend like income in your portfolio anymore. It goes on to note that purchasing shares of high dividend paying companies is a great way to increase profits. Apparently the investor can stand to make an extra 5%, 10% or more over a one year time period. The web release maintains that some companies do not reward their loyal share holders with any type of dividend. The release tells you how to get dividend-like income from your non-dividend paying stocks.

“Here's how it works... Most stocks offer publicly traded options. You make these transactions with your broker, similar to buying and selling stocks. A call option gives another investor the right to buy shares from you at a price you set anytime before a certain date. You collect a premium by selling the call and you get the premium, in cash, on the day you sell the option. Just like a dividend. One strategy is to sell "at-the-money" or "out-of-the-money" calls on your stocks (Covered Calls). This means the strike (expiration) price of the option is at or above the current stock price. If you set the strike price so high the stock doesn't reach that price, you keep your stock. Widely held, heavily-traded stocks like Microsoft (MSFT), Google (GOOG), and Ebay (EBAY) are perfect for this strategy. Option premiums fluctuate but the examples below illustrate returns you might expect over the period shown for every thousand shares of your stock. You can sell options each month, up to 12 times a year, after they expire. It's not unusual to see return rates of 12% over sixty days, which works out to an astounding 72% annual return just on stocks you already have in your portfolio. Of course brokerage commissions and taxes will affect your actual returns.�

The site who issued the web release are seemingly knowledgeable in terms of options trading. PowerOptions claims to provide the essential data you need to invest with stock options. Their patented SmartSearchXL® technology is not available anywhere else. They claim it's the best way to understand and make money on stock trading.