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Stock Market

Discussions related to interacting with stock market; whether it be about stocks, bonds, options, mutual funds or anything involving the market.

The Real Stock Price: Ask, Bid and Maximizing Profits

Mon, 06/28/2010 - 08:12 — mighty_moe

This is just a little primer on stock trading for the beginner. I want to relay my own mistakes in my early days of trading. In particular, the "price" you see for a stock does not mean you can buy and sell that price. It only means what the stock sold for in the last trade. Your price has at least a 50% chance of being worse than that. Let me explain.

Along with dozens of other commonly kept statistics about each listed stock, there are two very significant items: bid and ask. These are the two items you need to know when trading. They determine what the next stock "price" will be.

Covered Calls

Thu, 05/27/2010 - 14:00 — mighty_moe

Covered calls are nothing new. Basically, when you sell a covered call, you give the buyer a right to buy your stock at a certain strike price. For example, if I thought a stock of mine might hover around $24, and I saw that people were willing to buy $25 strike price call options for $4, I would sell the covered call and take a nice profit. I do this all the time as it reduces my market risk and gives me a slightly better guarantee in the stock market. Of course, there are still market risks with this strategy, but your loss risk is reduced.

Stock Options and Covered Calls Part 1

Thu, 05/27/2010 - 13:32 — mighty_moe

What is a stock option? Basically, a single stock option gives an option holder the right to buy 100 shares of stock at a certain price. I will explain how they work in the simplest terms I can. Stock options are a little more complicated than stocks or mutual funds, so some terminology is involved. Here are some terms to know:

Strike Price - price at which the underlying stock that the option represents can be purchased at. For example, a strike price of $15 on GE means I can buy 100 shares of GE stock at the price of $15/share.

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