Friday, June 29, 2012

Friday's Best of The Web 6/29/12 @OptiontradinIQ @Options @dividendninja

Today's first article comes from a blogger whom I already mentioned here, @OptiontradinIQ, in a previous Best of the Web article.  While he does offer a paid subscription, OptionIQ gives out a lot of useful free info as well.

In this article, he describes an indicator you see me use all the time in my Monday Market Conditions, the McClellan Oscillator.  OptionIQ points out that it has been pretty accurate signalling market tops.

"As you can see, a reading above 80 on the McClellan Oscillator has marked interim tops pretty reliably. It triggered in July 2011 just before the August crash, in late August 2011 before the sharp move lower in September 2011 (especially in commodity stocks!), then again in mid and late October 2011 as the market headed for the sharp move lower in November 2011."

With today's big pop, I expect us to creep closer to a reading of 80 again.

Read the full article here.

The Options Insider is a relatively new follow of mine, but one that should not be missed.  You can find post after post of informative info and analysis covering a broad range of topics.

In his post, OI gives a brief lesson on adjusting your option positions, a key skill to master when selling credit spreads.

"Adjusting options positions is a technique in which a trader simply alters an existing options position to create a fundamentally different position. Traders are motivated to adjust options positions when the market physiology changes and the original trade no longer reflects the trader’s thesis. There is one golden rule of trading: ALWAYS make sure your position reflects your outlook."

Read the full article here.

The last article comes from @dividendninja, who is also an income investor, albeit a more conservative one.  Like his name implies, DN looks for value companies paying high dividends.  A great strategy I myself once employed.

In this article, DN describes how dividend investors can boost their returns by selling covered calls against their long positions.  A simple, yet effective strategy that is perfect for novice traders.

"You can see from the payoff diagram that the maximum gain on this trade is $398 which is the difference between the purchase price ($75.50) and the strike price ($77.50) plus the premium received ($198).  In addition to this, you still receive dividends during the life of this trade, so you would still receive the $51 dividend due in September. And the best part of all? If KO finishes below $77.50 when the call option expires, you get to repeat the process all over again by selling another call option."

Read the full article here.


  1. Hey thanx for the mention! I'll tweet out your post :)


    1. Welcome and thanks. Feel free to stop by any time!