November 25th: Where do I start?

Hello Everyone!

Long time no see, I have something special in the works for you guys so please be patient with me :)

I conducted a workshop over the weekend and I got a lot of questions and I wanted to offer answers to whoever is reading! The number one question I received is where do I start?
Here are some of the steps I took. As you know if you have any questions tweet me, comment etc!

1. First make the decision that you want to begin trading. Although this seems like a no-brainer, trading does involve commitment and risks. If you're willing to put in the time you can really learn a lot and do more with your money. Remember a lot of the market is based on people's emotions. As soon as you put a trade into play check your emotions at the door, the market is going to do what it wants. Trade accordingly.
2. Set a trading plan.This is SUPER important. Don't fudge your plan to fit what you want to do. When you've hit your desired profit liquidate. If you've been losing on a position, get out. It's important to set these standards beforehand so you are not trying to figure it at the last minute.
3. Decide how much money you are willing to invest. This should involve a serious look into your finances. This money should come out of discretionary income, not rent/bill/emergency money. There is an opportunity to make money but there is also an opportunity to lose that money as well.
4. Now that you've put some money aside set your targets.This goes for both losing and winning positions.
• What are you willing to risk? Set your risk level at a safe percentage (1%-5%). Meaning if you have $1,000 position and it's down $150 get out and stay out.
• What is your target profit (risk/reward)? How much are you willing to risk in order to make a profit. If you're just going to break even from a trade then what is the point of even doing it? AT LEAST have a 2 to 1 ratio (for every 1 dollar you risk, there is a 2 dollar reward) 
5. Exit and entry strategies.
• Now that your risk level is set be ready to exit a position if it is not performing. You will not always pick a perfect stock and you will be wrong. Don't wishfully think some magic is going to happen. Get out! Write down where you want to get out, discipline yourself to get out. This also goes for profitable positions, once you've hit your mark liquidate. You will never lose taking a profit. It is a horrible feeling when a position is losing because you held on too long. Don't be greedy!
6. Compare online brokerage accounts. If you are going to trade options which is what I mostly talk about in my blog I would suggest Options Xpress, they have pretty good rates. Beyond rates look at their virtual trading system, tutorials for entering positions and options for your mobile device. I haven't looked around recently perhaps I will do a comparison one of these days. 
7. RESEARCH RESEARCH RESEARCH. Watch the news find out what is going on in the world, what is going on in the economy.
8. Pick some stocks that you think are going to grow. I think this is where a lot of people get overwhelmed. The thing that I like about options is that you do not have to pay the price of the stock, which gives you access to companies like Apple and Google. You're deciding on a movement, which makes it a more manageable. PAPER TRADE (or Virtual trade in most cases) Act like your actually trading without using your money. You are the consumer,companies base their success on your purchasing decisions.

Don't be overwhelmed! Be discpilined, have confidence and gain knowledge.

I know this was a wordy post but I got a lot of questions on where/how to start so I wanted to give some details.

Thanks!
Brit


I have attached some pictures from my workshop last week!

October 24th, 2012

Hello!

I have some tips after looking at the market so far this week.

The DOW and S & P have been trending downwards the last couple of days and if you're looking to buy now is the time! Right now the market has been pretty dull, there have been some earning winners but the rumors of Bernake retiring (which would slow down the market)  and Romney's performance on Monday (chances of having a businessman in office) have some investors worried.

What do you do when the markets are flat? Don't get scared or shrug away, BUY!!

One of the fundamentals of trading: Buy low, sell high. You aren't going to be able to buy as much in bullish market.


I've attached the charts for both below to show trends

Buy some gold! The Gold December options (GCZ2) are a buy right now!
When people start to get worried about the stock market they look to gold.

I've attached a chart showing the relationship between the Dow and Gold for the last 3 years.  We notice that when the dow drops gold goes up. What's the dow doing right now...(Going Down) it's just a matter of time before gold reacts.

The price forecast of gold for 2013 has been estimated $2,000 per ounce!




Google: Google is a good company and we've seen solid growth in the last six months. Right now is the time to take advantage of the price drop (anywhere between 675-680). I'm going with some $755 Nov Calls (priced at about .65). Google was able to reach the 750 range at this beginning of this month/ end of September and I think we will see it again.


I'll tweet more buys if I have some.

Let me know if you have any questions or if you have some potential buys.

October 13

I am so sorry! I have been swamped with midterms. But I wanted to give informative post that kind of breaks down the options market.

What is an option?

An option is a derivative instrument based on stocks, commodities, futures etc.

you're probably thinking... What is a derivative instrument?  It is a trading tool that is valued from another security. This means the value of the option moves due to other securities and variables.
 ( from http://www.optiontradingpedia.com/)

Options Quotes

Unlike the stocks you see ticking on the top of your iphone a options price will be listed separately. While the stock price is important factor of an option it is possible for an option to be down while it's stock is up. I have attached a picture of an options chart 
(from Yahoo Finance Options for Google)

I have previously tweeted things like I bought a Sept 115 Goldman call, this mean that from the time I bought the call until it expires I expect the stock to be $115. I bought the option when it was trading around $99. We see here how the stock price plays a roll in the option but isn't the end all be all to the option. 

Research and expiration

Options are speculative, you speculate if the stock will go up or down. It isn't very smart to just go make decisions on stocks without doing the proper research. You can use sites such as marketwatch and cnbc to identify trends, use current events such as earnings. You can also use spreads but that is a little advanced. Make sure you use the information to help gain an edge.

When picking the price of the call you want the option to be "in the money" before it expires. For instance it is possible for Google to trade at $1000.00, but if you're buying an option that expires soon it is very unlikely for it to happen in the given time frame.

With that being said it's important to pay attention to the price you pay or the price you sell the option (bid/ask) the closer you get to being "in the money" the more expensive they will be. If we look at the table from earlier we see that as the strike price increases the price decreases. 

Benefits of Options

Options give you the opportunity to trade highly priced stocks without the capital. (yay for college students) for example: You buy 100 Oct. GOOG Calls, that will cost $300. If you wanted to buy 100 shares of GOOG it would cost $74,400 (woah).
When picking your calls or puts don't just go by the cheapest price, pay attention to the strike and the expiration.

Options also offer some protection, you can only lose the amount that you paid. If we look at the previous example, if GOOG starts to move against you, the loss will be $300 as opposed to $74,400.

They also offer flexibility, you can gain on an option that is gaining or losing. You can also be conservative or risky.

Let me know if you have any questions! I am here to help. I know it's a lot of information but it's important to understand the basics before you start!

Best,Brit

For up to date info follow my twitter

September 9th, 2012

GOLDMAN!

So I haven't had many positions since my last update. I picked up some last minute calls of $GS and just waited and watched! It moved slow but I am so glad I was patient.

I had about 40 $115 September Calls, it was finally "in the money" on Wednesday as it got closer and closer to the 115 price. By Friday this was about a $5,000 trade. Happy Birthday to me!

I've been researching all weekend for some new positions. Check my twitter for my most up to date trades. www.twitter.com/TheBritReport

Thanks!
Brit

August 25th, 2012

Hello!

I'm back! I finished my internship about two weeks ago so I've been spending the last couple of weeks preparing for school. Since my last post I've made a few trades. I will be getting back into the swing of things on monday.

Google
On top of Goldman I dipped back into Google buying a September $705 call for 1.85 selling it at $3.60 realizing a $365 gain.

Goldman
I'm still heavy in Goldman. I've bought about 10 more 115 September calls looking to see some upward movement this week. The stock has climbed since my original buy but still not enough.


Got excess refund?

Earlier this week I tweeted about investing your refund check. I'm not financial planner but I will share that right now interest rates are low. You will barely get any money back placing excess funds into CD or savings account. I would consider an options account. Read up on stocks you like, practice paper/virtual trading and if you have questions tweet me! Options accounts usually just charge a commission and it's a better than just letting your money sit.

Be sure to follow me on twitter for my most up to date trade info @TheBritReport

August 10th, 2012

Hello all!

Let's get to the money!

Ten Year Note

FINALLY the TYU turned in my favor. I had 6 short positions since about the end of July for September expiration. I had an average of 134'410 and liquidated at 133'175.

Here's are the calculation for profit for a short position

Sold Price     Bought      Tics      Tic Value     Profit
134'000     -  133'175 =   17.5  x      31.25    = $546.875
133'270     -  133'175 =   9.5    x      31.25    = $296.875
134'110     -  133'175 =   25.5  x      31.25    = $796.875
135'025     -  133'175 =   49     x      31.25    = $1531.25 * 3 = $4593.75
__________________________________________________________________
Gross Profit                                                                              $6,234.375

AWESOME!

At one point this looked like a loser but I held out and didn't let my emotions take over and now it's $6,200 winner. If you've been following my TYU calls... you're welcome =)

Goldman Sachs

Currently, I have 25 Goldman Sachs (GS) 115 September Calls. I have been extremely bullish. As I stated on twitter a couple weeks ago it only takes some good news to have it shoot up. I am hoping that the news about Goldman not having legal liabilites regarding the subprime mortgages gives the stock a boost today. I need a rally in GS NOW.

 

That's all for now!

Brit

August 2 2012

Blog

Hello all!

I've been having some serious technical difficulties! Sorry I've been MIA I'm updating via phone so I'm gunna keep it short!

Apple

Last week I bought one 670 apple call. I bought it before they came out with earnings unfortunately they missed their earnings! The stock dropped 30 bucks after hours. I am still holding the option... It has about 10 days to expire, since earnings it bounced back from its loss and hope it keeps climbing.

Google
Google was really a winner last week. I bought two 650 calls... There was some resistance at the 615 level but once it broke through that level it was all support! I got out of it Friday with a $550.00 profit. Remember never lose taking a profit.

What is market resistance?

The price at which a stock or market can trade, but not exceed, for a certain period yof time. - investopedia

Basically consider it like a ceiling every time a stock gets to a certain level it has trouble going past it. (resistance level) once it passes that level it climbs! Now it's trading at about $628

What is market support?
The price level which, historically, a stock has had difficulty falling below. It is thought of as the level at which a lot of buyers tend to enter the stock. - investopedia

This is kind of like the floor.

You can analyze charts to see previous trendlines of support or resistance and make decisions based on your findings... This one was a freebie :)

Monday I bought 6 $115 September Goldman Sachs calls. GS moves slower and has a little bad press but all it takes is some good news for the price to go up.

That's all I have for now !

Brit

July 16th 2012

Hello!

I am going to keep this post short and sweet.

After my last post I bought another Gold at 1564.90 which brought my average price to 1573.40 ((1578+1564.90+1577.40)/3)

On Friday before I boarded my flight gold was at $1584.10 (up $10.70 from average price), I decided to take a profit. Although gold kept climbing throughout my flight I am happy with my decision to liquidate. It is a terrible feeling to stay in a position too long and pass up the opportunity to gain. You always win taking a profit. Here's how I can calculate the gains from this transaction:

(Settle price-purchase price) x tick yield = Profit
You would want to do this for every position

1584.10-1578 = 6.1 x 100 = $610


1584.10-1577.40= 6.70 x 100 = $670


1584.10-1564.90= 19.2 x 100 = $1920
__________________________________
Total Profit                          $3200.00


If you followed this pick you are $3200 richer! Not bad for a weeks work.

Remember when you BUY (long) a position you think the market is going to go up. When you SELL (sell) a position you think the market is going to go down. The person who sold me these three positions thought the price of gold was going to decrease. I thought it was going to increase, I was correct and sold them at profit to someone else who thought the market was going to go even higher.

That's all!

Brit

July 11th, 2012

Hello everyone!

I just want to update you on my positions! Also give more information regarding some of the terminology. I realize some of it may be a little confusing so I am going to post a brief explanation of tick values! As the quarter comes to a close companies will begin releasing their earnings. This information can help you gain an edge, the further out you make a position the better.

 Let’s get started.

Gold:

I bought another gold contract at 1578, bringing my average price to 1,577.70. 

Crude Oil:

On Friday I faced a 2,087 loss after liquidating crude. The same day I reestablished that position going long at $84.59. Today crude rallied and sold both of my contracts at $85.60.  Therefore after that position my loss went from $2,087 to $67.00. If I would of stayed in a little longer I would have realized a profit. I will continue to wait for another dip and probably up my number of contracts. ($67 loser)

Ten Year Note:

I have 3 contracts short at 134’00 in the ten year note. My original plan was to buy them back closer to the time of purchase but I decided to change my plan of action and treat this more of an investment. (loser for now)

I still have positions in GOOG and AAPL, although they have dropped since Monday I definitely think GOOG is a buy.

Calculating a loss or gain from tick value.

Each futures contract has a minimum price increment called tick size. For example crude oil has a tick size of $.01 this basically means that crude moves in one-cent increments you won’t see it moving  $.011. Information about tick size can be found at the www.cmegroup.com pick a contract and click contract specifications. You will also need the contract size, which is the number of units in the contract.

How to calculate dollar value of each tick:

Dollar value per tick = contract size * tick size

Therefore, the dollar value per tick for crude is: 1,000 (barrels) *.01= $10.00, meaning for every cent that crude moves it is either a $10.00 profit or loss.

Let’s apply this example to real life. 

You buy crude oil at $82.30 about an hour later crude is UP at $85.30.

In this example the change is $3.00, which is 300 cents (or ticks), you would multiply 300*10 and you would have a profit of $3,000.00.

That’s all for now  

July 6th,2012

The estimates for the non-farm payroll were lower than anticipated and unemployment remained at 8.2%... the markets reacted accordingly the Dow closing under 124 points. Let’s go through the days positions.

Crude Oil- 

I liquidated crude at 84.40 with a 2,087 loss but after some additional research I reestablished the position. I bought 2 contracts in the crude oil, the first at 84.65 and the second at 84.52 which brings me to an average price of 84.59. Adding to a position allows you to enter at different levels as opposed to one price. If crude is dipping I would suggest a buy!

Apple- 

 I added to my apple position buying more $625 calls at 11:08 am when the stock was trading at 603.83 settling at 606.25, which gives me a total of two positions in Apple. This is an approximately a $1,500 winner.  I am going to review some charts this week.

Google

I decided to buy some Google positions in addition to Apple. I bought the $625 calls when the stock was trading at 584.83; this was also a $625 call.

Ten Year Note- Loser

Oh the ten year. I decided to add to my ten year position, I’ve have three contracts short at 134’00, currently is 1,406 loser. Even though this is currently a losing position and a lot of people would suggest against adding to a losing position. I am confident in my decision.

Gold- The Winner!

I bought gold at 1577.40 settling at 1578.90, for every dime gold moves it has a $10.00 tick value therefore this is a $1,500 winner. Are you with me? Ended the day a happy girl! Even though I lost money in crude I definitely reestablished myself with this position.

Google and Apple are both promising companies. It’s important to remember that prices are based on the future of a company, a lot of the information we are receiving now has already been factored into the market. I think an important tip if you are interested in trading is looking for an edge in the market. You want to be able to see various cause and effect patterns and factor those into your decision.

For example the news of a new iPhone being released will not have a profound effect on the price, Apple releases a new iPhone every year that’s not an edge. However, finding out that Apple has ordered parts to start making televisions is an edge that will effect the market.  Keep this in mind when you are considering the direction of a market or investing in different stocks.

I’ve been getting some questions about getting started with trading, I think paper trading is a very good way to begin to understand the markets. Sign up for a virtual trading account to get familiar with the terminology and understanding your decisions without risking anything. Also studying charts helps, cross-referencing charts and events for the company will help you understand the future of the company.

Friday was definitely a tough market but I am comfortable with my positions. Earnings will be released soon I will have some thoughts at that later this week. I have attached screen shots of my calls for proof… Be sure to follow me on twitter @TheBritReport for the most up to date positions.

That’s all for today!

Brit

I wouldn't surprised if the stock market rallies back by the end of day .....gonna buy google calls and get short another ten year

July 5th 2012

Thoughts on Apple

AAPL is getting closer and closer to my $625 call… I made this call when it was around 595 and it closed today at 609.94. Nice little chunk of change I think it will go even higher tomorrow. Considering the news of the new mini iPad (crossing fingers for a new iPhone) With the new non-farm payroll we should see some upward movements in the markets hopefully in apple.

           

How does non-farm payroll effect the markets?

The payroll tells us how many people were hired, the higher the better. The more people on payroll means more money being injected into the economy. Which leads to more products being bought and sold. This could be great news for crude, when the Dow is doing well crude tends to do well. A lot of products are made from crude such as plastic and gas, when there is an increase in these products it will increase the price of crude.

With that being said lets get into crude oil.

Just last week crude was at $77!  Wow I would take advantage of drops in crude I think it’s just going to build more and more momentum.

This afternoon I decided to go long in crude when it was at $87.27 about .50 or .60 cents higher. My plan was to liquidate before market close but I decided to hold it until tomorrow… market was kind of working against me. I like crude because of the yield, every tick is 10 dollars. CHA CHING!

Lastly the ten year note -___-

TYU was actually up today… I went short at 133’270 and added to my position at 134’00 giving me two positions total. Buy tomorrow, hopefully at a profit.

That’s all for today! 

Brit

Hello!

Hello all!

My name is Britney Holloway, I am a rising senior at Michigan State University studying finance and hopefully after this fall working on a minor in economics. I wanted to start a blog so I can keep track of my calls and reference them in the future. I also wanted to shed some light on commodity futures, people seem to be daunted by the idea of trading especially commodities but it is really not as scary as it seems.

I want this to be an open forum with discussion and questions. If you disagree tell me, if you think I’m correct tell me why. I’m not professional just sharing my personal opinions and research. I want to make it very clear that the statements expressed are opinions if you decide to follow my calls I am not responsible for any monetary loss you may incur. Truth be told if you lost money I’m probably losing money too!

Enough of that let’s get to the good stuff!

First off what are futures contracts?

According to investopedia a future is a contract obligating the buyer to purchase an asset or seller to sell and asset ( ie physical commodity like crude oil or financial instrument like a 10 year note) at a future date and price. Futures can be used to either hedge or to speculate on the price movement of the asset.

What does that all mean?

Hedging is an investment process to preserve values and help reduce risk.

Speculating is picking the direction of the market you either expect the market to go up (go long) or go down (go short)

Let’s put this in some real life terms.

Lets say I am a farmer ( long position) and I want to secure the selling price of a crop at the same time an organic market (short position) will want to secure a selling price to determine profits.  I enter a futures contract to sell at 1,000 bushels at $5 in April. Futures contracts depend on the movements of the market. If a week after the above scenario futures contracts drops $1.00 the farmer loses a dollar and the organic market profits a dollar.

This is a really simplified description but as I make my calls I’ll go into further detail.

Let me know if you have any questions!

Yesterday I made a call on ten-year notes, that’s what all that mumbo jumbo below is.  Basically I expect TYU to go down which is why I went short. Interest rates are so low that it makes more sense to invest in stocks as opposed to notes. When I made the call TYU was at 133’70 by the end of the day it had dropped to about 133’20! Holla! TYU yields $31.25 a tic the bigger the order the more you profit.

God Bless

Brit

Call

Short the ten year note

Sell 1 TYU at market.

Keep eye on apple... Consider long position.