Posts tagged "Microcap"

More About Penny Stocks And Penny Stocks Blogs

If you're curious to learn about day trade penny stocks and the ways to generate income trading them, it's imperative that you recognize that, as what they're called suggests, very cheap stocks are low priced stock shares. Their name comes because they're often traded in just pennies and have a valuation of under five dollars. Due to their low price, they also have a tendency to draw a great deal of customers entering into the market and, if you follow penny stock blogs and penny stock alerts, you'll see that you will be able to get staggering rates of return from a relatively small investment. Needless to say, as it the case with most investments, very cheap day trade penny stocks don't offer the guarantee of quick cash.

It's essential for an investor in small cap stocks to understand what are the penny stock blogs and alerts are trying to tell them. Only when one has the correct information and research accessible can anything stock trader truly wish to be prepared to reap any benefits. Even then, there's no guarantee that penny stocks are going to be profitable.

Knowing all of this, if you're still considering buying penny stock lists, one thing you'll have to do is bone on the most recent tips and trading approaches for making solid investment decisions.

There are two ways to trade in penny stocks. You can do so online otherwise you can hire an agent to achieve it in your place. Regardless of which method you choose, it's wise to be as educated on the latest trends as it can be. Informed investors are often the richest. That's why penny stock blogs, forums and cheap stock alerts are very popular. If you're educated as to the trends, you'll be more apt to see if your penny stock investments are the right ones. Better yet, when you choose to utilize a broker, the more you'll be able to benefit from penny stock blogs and cheap stock alerts, and the more likely it is that you'll see if your broker is taking advantage of you or helping you by keeping your best interests top of mind.

Finally, when you purchase penny stocks, it's important not to invest a lot more than you really can afford to lose. Most of the penny stock blogs will alert you to this. Like gambling, stocks are often like a casino game of chance. There just aren't any sure bets in investing. And, in penny stocks, it can be tempting to overbuy seeing as the the cost is so economical. Be mindful and become smart and hopefully you'll earn a big side income in small cap stocks.

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Here's a website that will provide more information on: Penny Stocks Blog

Covered Call Risks And Opportunities

Although covered calls seem to have low risk, it is possible to get into trouble if you don't pay attention to the risks that do exist. You may do quite well for several months and then find yourself having a really bad month because you ignored or forgot to research some of the risks.

The first risk is an unexpected tax event. Because U.S. style options can be exercised at any time prior to expiration, the seller of the option (i.e. the covered call writer) has a risk that the buyer will exercise the option prior to expiration. Normally it doesn't make economic sense for the buyer to do this if there is still time premium remaining in the option, because the buyer forfeits the time premium when he exercises. So if he wants to close out his option that still has time premium then he would be better off just selling the option instead of exercising it.

Hard to believe but there are some uninformed actors involved in the stock market. They do crazy things like take early exercise on options that have time premium (whereas it would make more financial sense for them to just sell the option so they didn't have to forfeit the time premium). Now, if this happens in an IRA account it doesn't matter (since it's a non-taxable account). But in a taxable account it can cause tax problems. Usually you only have to really look out for this as an ex-dividend date gets near, and only then in options that have just a penny or two of time premium.

Next risk is the reduced upside potential above the strike price. The covered call writer can set the strike price to whatever value he likes, but one thing is true -- whatever value he sets it to is the most he will receive for his stock between now and expiration. If there is a happy surprise of any kind (M&A takeover, increased guidance, earnings beat, competitor fails, etc) and the stock rises above the strike price then the covered call writer will not make as much as he could have made if he hadn't sold the call.

Downside protection is comforting, but should not be leaned on as a savior to prevent all losses. The option premium you receive will cushion the first part of any loss but if the stock drops significantly then you will probably still have a loss (less than a buy and hold investor, for sure, but it's still a loss). Often cited as the tradeoff for putting a cap on your upside potential, it is definitely a good feature of the strategy but just be aware that you can still lose money with covered calls.

Lastly is the risk of chasing yield. It's tempting to use a covered call scanner to identify the highest yielding covered calls and then just blindly write those options. Seldom a good idea. A covered call scanner is just a starting point for additional research. It will help you identify juicy premiums as an idea list to start from but then the you need to thoroughly research each one before investing. Covered calls have risks but they are one of the most conservative investments an investor can make, if used correctly.

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