Once a week you get our PriceWatch alerts by email. If you're a PowerOptions subscriber, you get them almost every day. What are PriceWatch Alerts all about? What do they mean? How can you use them? And... What does my mother have to do with this?
Every trading day we send out several PriceWatch Alerts. They are distributed through a major news services so you might find them on any of over four thousand news, brokerage, and finance web sites. Our Subscribers get the alerts up to an hour before they go out over the news wire.
What are the PriceWatch Alerts?
Our SmartSearchXL spends the whole day watching the markets. You may be watching soap operas and we may be hanging out by the pool, but SmartSearchXL doesn't take a break. Our patented technology hunts for the highest return, lowest risk, best of the best, safest investments out there. Why mess with low return, high risk, worst of the bad, unsafe investments when there might be a better way?
What the PriceWatch Alerts are not...
PriceWatch Alerts are most certainly not recommendations. DANGER! DANGER! DANGER! There is no way you should ever read a PriceWatch Alert and run right out to do the trade. Our intent with PriceWatch alerts is to show you examples and call your attention to a particular trade that might be worth further investigation. DON'T TRADE BASED ON THE INFORMATION YOU SEE IN A PRICEWATCH ALERT.
What criteria are used for PriceWatch Alerts?
We use basic criteria when creating PriceWatch Alerts. It may not seem to scientific but it works. We ask ourselves this question... "Is this a trade I would give to my mother?"
When I was a kid, my mom never sat around the kitchen table playing poker and I'm pretty sure she never went to Las Vegas. She never bought a lottery ticket either. She's not a gambler, so PriceWatch Alerts mostly stick to relatively conservative investments. Okay, you might see a few that are on the wild side, but when SmartSearchXL finds them they go into the alert. Mom would understand. She's also going to look closer at the company to be sure it's solid. She's like that. You should be, too.
PriceWatch Alerts mostly include stocks that meet the following five points:
Larger Companies that typically trade over 3.5 million shares of stock a day.
Companies with stock prices that are on the rise.
Companies with higher rating by analysts and brokers.
Companies with technicals (charts, price, volume, momentum, institutional buying, etc...) that look positive.
The sixty day return on the investment is at least 5% and we shoot for around 10% (annualized that's 30% to 60%). You might see a lower return if the stock pays dividends.
What do the PriceWatch alert numbers mean?...
First let's break down a sample PriceWatch Alert. This is what they look like for a fictitious stock:
-- XYZ International Inc. (Nasdaq: XYZ)
Last Price 29.10 +0.08
NOV 27.50 CALL OPTION@ $3.60 -> 7.84 % Return assigned
The first line is the company name and stock symbol.
The second line is the Last Price and the change for the day. XYZ's current price is $29.10 and it is up 8 cents for the day.
The third line has the information you won't see on CNBC. It's the Hedging position. This is the trade you can do to lower the initial cost of the XYZ stock, increase your return if the stock goes up, and reduce the effects from a drop in the stock's price.
There's no way I would get my mom into a stock with out a hedge. (Hedge in this case means downside protection) She would never drive around in her spotlessly perfect 1985 sky blue Buick without auto insurance and there's no way she would ever invest in a stock without a hedge.
Let's look at the math...
In the example above, a November 27.50 Call option is sold at the same time the XYZ stock is bought, so you receive $3.60. Instead of paying 29.10 for the stock you only pay 25.50 (29.10 - 3.60). Even if the stock drops 13% you will not lose money. But if the stock stays above $27.50, on expiration day the stock will be gone and you will receive 27.50 a share so you made $2 on the investment (27.50 - 25.50)
To figure the return rate on the investment, get your calculator out because it will take some division... You divide the return by the amount you invested. For this example, you would divide 2 (your profit) by 25.50 (what you invested) to get a 7.84% return rate (2 / 25.50).
How can you use PriceWatch Alerts?
There are three ways you can use PriceWatch alerts:
If you are following a stock with an interest in buying some shares and a PriceWatch Alerts pops up, it may be a signal that there is a way for you to get into the stock at a lower base price.
If you already own the stock, there may be a way to squeeze some cash out of it while you wait around for it to go up in price.
The alert may bring a stock to your attention that you may not have considered before. This is the case where you really need to investigate the stock more to be sure it fits your investment needs.
Maybe your mom lives in front of multiple computer displays all day watching market data stream by in red and green Christmas colors. Well mine doesn't. That's why we started issuing PriceWatch Alerts.
Now if I could only get my mom to stop spoiling my kids, life would be great.
We send out PriceWatch Alerts! on a regular basis, but you can find these type of high return covered calls any time based on data continuously updated all through the trading day.
Use the steps below to find your own PriceWatch Alerts!
If you have not done so yet, go to http://www.poweropt.com/logon.asp. The Member/Trial Log On Display will appear.
Enter your user ID and password then click the [Log On] button.
When the MY HOME page appears, click the "Covered Call" navigation tab in the top left.
Now click the "Search" link in the "Covered Call Tools" section of the page - near the middle.
Scroll down the page until the SmartSearchXL Settings area appears. At the top of the search settings area you will see a box labeled: Search Settings Saved As: [ ]
Click the selector for the "Search Settings Saved As" box then scroll down and click on [**PriceWatch Alerts! #1] to select this named search criterion.
The parameters we use to identify PriceWatch Alerts! will automatically fill into the blanks and the search results table will be updated to contain covered call stock/option combinations that fit that criterion.