With the PowerOptions BrokerLink, you can trade any position you find quickly, accurately, and easily. For more information please refer to the BrokerLink Help page. Feel free to email or call if you have any questions: 302-992-7971.

Before making an investment write down:

• your objective with the investment
• what to do if it goes up, goes down, or stays the same
• keep notes on your thoughts and events
• review the notes quarterly to improve your process
• use "My Portfolio" and the Notes/Stop Limits feature of the Profit/Loss Portfolios to manage these processes
  

Your choice of the strike price is how you control the risk in doing a covered call. For more information, see Learning Center, Tutorials, "Magic Strike Price" for a paper presented at OptionsXpress May 2006 Expo.

When considering covered calls that span several months, use the annualized returns to compare the different time frames on an equal footing.

When you do a search with SmartSearchXL, change only one parameter at a time. In this way if no results are found you will know what parameter change was too restrictive.

Generally, the highest annual returns are obtained by writing calls every month rather than several months out in time.

As the stock price moves up and down to a new strike price, consider taking some actions to take advantage of the move. See our Follow-up a Covered Call Position reference.

Beware of very high returns. If the returns are too high to believe, they are probably high for a reason. There is an error or there is generally very high risk associated with the high return.

Once you have analyzed a lower and upper stop limit for your position record those values using the Notes section. The Portfolio will alert you, with a note at the bottom of the portfolio, when those stops have been hit.

From the Profit/Loss Portfolio you can analyze one position at a time. Just link your position into the Position Analysis tool using the "More Info" buttons. This will calculate your original position, current liquidation value, and possible future expiration value. And then show potential Roll Out opportunities for most strategies.

You can add old positions into the Historical Portfolio to enhance your overall accounting. Simply click 'Add Closed Position' and enter in the information.

Remember, Puts are typically priced lower than calls. If you expect to get a 3% return on moderate Covered Calls, you might only expect to make 2.5% trading moderate Naked Puts.

Here are some useful guidelines:

• Only trade Naked Puts on stocks you would like to own.
• Use the Simple Moving Average field to find stocks in an uptrend.
• Use the Recommended Lists to screen for Recommended Stocks (S&P 5 star, etc)
  

If the stock drops you can:

• Buy back the put and accept the loss on the position.
• Buy back the put and sell a deeper OTM put to lessen the loss incurred.
• If you are still bullish let the put be assigned, then sell a Covered Call.
• Advanced - As the stock drops buy a put at a lower strike. This does not repair the Naked Put, but it stops major losses from occurring.
  

Deeper OTM (further below the stock price) Puts offer greater protection but less premium. An investor should not expect find trades 10% OTM with a 5% Naked Yield. Naked Put trades that are 10% OTM and offer a 5% yield carry a heavy risk (BioTech stocks). Due to pending events, like FDA approval, these stocks may drop 10, 20, or even 50% of their value causing large losses.

Shorting stock should only be done by experienced investors. Make sure you are aware of the risks with shorting stock and selling puts before you trade this strategy.

Deeper OTM (further below the stock price) Calls offer greater protection but less premium. An investor should not expect find trades 10% OTM with a 5% Naked Yield. Naked Call trades that are 10% OTM and offer a 5% yield carry a heavy risk (BioTech stocks). Due to pending events, like FDA approval, these stocks may rise suddenly causing large losses.

Theoretically, Naked Calls are considered the riskiest options strategy as a stock could rise infinitely. Make sure you have researched the underlying security thoroughly before placing a Naked Call trade.

If you are bearish on the stock you can greatly reduce potential risk by trading a Bear Call Credit Spread instead of trading a Naked Call.

If the stock rises you can:

• Buy back the call and accept the loss on the position.
• Buy back the call and sell a deeper OTM call to lessen the loss incurred.
• If you are still bearish let the put be assigned, then sell a Covered Call.
• Advanced - As the stock rises buy a call at a higher strike. This does not repair the Naked Call, but it stops major losses from occurring.
  

Create as many Portfolios as you like to separately track different accounts or strategies. You can have a Portfolio just for Long Stocks, one for an IRA account, one for just your Covered Calls and one for strategies you are paper trading.

Collar spreads offer enhanced protection in the case of a large stock decline. Unlike a standard stop loss, if your stock gaps down after hours or pre-market you are still protected by the OTM put.

Purchasing deeper OTM puts will cost you less and allow you to retain more of your initial premium from the sold call, but you will have less protection. When creating a Collar Spread, compare the different combinations to find the spread that matches your risk-reward tolerance.

If you are planning on being in the position for several months, use the Option Chain to compare the value of the 4 month or 6 month put. Buying further out in time will lower the annualized cost of the put, but it will put you in a Debit Collar trade for the first couple of months.

If you do not see your favorite strategy listed in the Tab Headings, simply click Other Strategies and select the stock option strategies that you wish to view. We generally show 8 of the 23 strategies supported on the site.

Covered Puts are the reverse of a Covered Call. The Covered Put trade will yield a profit when the stock drops.

• In a 'moderate' Covered Put an investor will short the stock and sell a put strike right at the short put strike price.
• In a 'conservative' Covered Put an investor will short the stock and sell a put that is one or more strikes above the short stock price (In-the-Money).
• In an 'aggressive' Covered Put an investor will short the stock and sell a put that is one or more strikes below the short stock price (Out-of-the-Money).
  

Many investors are using Naked Puts as a means to purchase shares of stock at a discounted price.

When analyzing a credit spread be aware of your risk-reward tolerance. Deeper Out-of-the-money credit spreads will yield a lower return but have a higher protection and higher probability of being successful. At-the-Money credit spreads will offer a high return but a lower probability of success.

You may be able to gain $0.10 or $0.20 cents of profit by changing a 5-point spread into a 10-point spread. Keep in mind that you will not only increase your reward but you will also double your risk.

When you enter into a credit spread your market value will be slightly negative due to the bid-ask spread on the long and short option. Be wary of options with a wide bid-ask spread as your liquidation value may be low if you have to close the position early. Also, options with a higher bid-ask spread tend to have low volume or high implied volatility (higher risk).

If the underlying starts to go against you, buy back the short option to avoid a large loss. If you think the stock will continue to go the opposite direction hold the long option and let it appreciate.

Experienced long option investors know that it is best to purchase an option that is farther out in time. The 6-month out, 50 strike option on a $50.00 stock is not going to 6 times the price of the one-month out 50 strike option. Buying an option farther out in time lowers the annualized cost and allows more time for the stock to move in the desired direction.

Experienced long option investors know that it is best to purchase an option that is farther out in time. The 6-month out, 50 strike option on a $50.00 stock is not going to 6 times the price of the one-month out 50 strike option. Buying an option farther out in time lowers the annualized cost and allows more time for the stock to move in the desired direction.

Do you have a sentiment on the direction of a certain stock but do not know which option might be the best to purchase? Click on Long Option Finder, enter in your stock symbol, your expected price, your desired investment amount and a target date for your expected price. The Long Option Finder will calculate which option would theoretically yield the best return if the stock hit your expected price on your selected target date!

Do you have a sentiment on the direction of a certain stock but do not know which option might be the best to purchase? Click on Long Option Finder, enter in your stock symbol, your expected price, your desired investment amount and a target date for your expected price. The Long Option Finder will calculate which option would theoretically yield the best return if the stock hit your expected price on your selected target date!

When analyzing a credit spread be aware of your risk-reward tolerance. Deeper out-of-the-money credit spreads will yield a lower return but they will have a higher protection and better probability of being successful. At-the-money credit spreads will offer a higher return but a lower probability of success.

You may be able to gain $0.10 or $0.20 of profit by changing a 5-point spread into a 10-point spread. Keep in mind that although you will increase the reward you will also be doubling your maximum risk.

When you enter into a credit spread your market value will be negative due to the bid-ask spread on the short and long options. Credit spreads where both options have a wide bid-ask spread may result in a large potential loss if the investor has to close the position early.

If the underlying security starts to move against you, buy back the short option to avoid a large loss. If you think the stock will continue to move against the initial position you can hold the long option and let it appreciate in value, potentially countering any loss you incurred when buying to close the short option.

When analyzing a debit spread be aware of your risk-reward tolerance. Deeper in-the-money debit spreads will yield a lower return but they will have a higher protection and better probability of being successful. At-the-money debit spreads will offer a lower net debit, a higher potential return, but a lower probability of earning that return.

A Married Put profit loss profile is the same as buying a call, but with some important distinctions:

1. Call do not collect dividends
2. Call buyers tend to over trade because of the high leverage. Owning the stock helps manage the investment size.
3. Owning the long call does not have as much flexibility to earn income
4. A long call cannot help in a declining market. The married put can be used to generate income

A married put is the perfect hedge. It does not depend on the tracking ability of an index to your portfolio. It insures your stock investment directly.

There are some analogies of home insurance to the uses of Put option stock insurance:

1. the longer the term of the insurance, generally the cheaper it is per unit time
2. if you have a higher deductible or more at risk the insurance is cheaper
3. the cost of insurance decreases the amount of profit made on the appreciating asset.

Married put insurance is more powerful than home insurance in many ways:

1. home insurance requires that you name the threat i.e. fire, water, earthquake ... Puts protect under any circumstance
2. home insurance does not insure loss in property value because of market circumstances, but puts insure a decline for any reason
3. puts on a stock even insure poor management or maintenance

Married put insurance is more powerful than home insurance in many ways:

1. home insurance requires that you name the threat i.e. fire, water, earthquake ... Puts protect under any circumstance
2. home insurance does not insure loss in property value because of market circumstances, but puts insure a decline for any reason
3. puts on a stock even insure poor management or maintenance

Doing married puts takes much of the investment timing out of the investing process. It is not necessary to be exactly right when you place the order because the investment is hedged i.e. the stock movement is countered by the put movement in the short term.

With married puts your risks are addressed first and rewards are worked out later. Most investors put the majority of time in evaluating return and timing. Married put investing puts the emphasis on risk and waits for the market direction to reveal itself before action is taken for income.

Using married put insurance gives me security, confidence, and comfort to sleep at night even in these turbulent times.

With 1/2 of my capital in Mutual Funds and 1/2 in Married Puts during the 2008-2009 declines our record of performance is:

Mutual funds down 40-50%
Married puts worst case down 9% best case up 19%

One needs a sell strategy. Covered call investors are especially prone to this problem. They tend to get called out of good stocks and hold the declining ones. In time your entire portfolio can be under water.

The use of "My Portfolio" is very powerful for managing your portfolio of stocks and options. It can be used to monitor liquidation value and expiration value of a position and more.

So you have a position, now what? Post position analysis can be used to find alternative moves to make which will enhance your income or profit.

Before entering a Bull Call Debit Spread, check the risk-reward of the parity Bull Put Credit Spread trade. For example, if XYZ is trading at $20.00 per share and you were researching the 17.5 - 15 strike Bull Call Debit, compare that to the 17.5 - 15 strike Bull Put Credit spread.

Most investors will enter a Bull Call Debit spread that has less than 60 days to expiration and where both options are In-the-Money (ITM). However, some investors will trade spreads that are further out in time, sometimes as much as 6 months, where the short call is Out-of-the-Money (OTM) and the long call is At- or In-the-Money. This approach is much more bullish and will result in a lower Net Debit, but you may have to wait longer to realize a profit. You can adjust the settings in the Search screen to identify both types of spreads.

Most investors who are entering into new Debit or Credit spreads will avoid stocks that have an upcoming earnings event. This mitigates the chances of any unexpected surprises that can cause large losses for the leveraged positions. To identify stocks that do not have an earnings date between now and expiration, simply check the box in the Earnings Date field in the parameter field for 'Not Between now and Expiration.'

Most investors who are entering into new Debit or Credit spreads will avoid stocks that have an upcoming earnings event. This mitigates the chances of any unexpected surprises that can cause large losses for the leveraged positions. To identify stocks that do not have an earnings date between now and expiration, simply check the box in the Earnings Date field in the parameter field for 'Not Between now and Expiration.'

Before entering a Bear Call Credit Spread, check the risk-reward of the parity Bear Put Debit Spread trade. For example, if XYZ is trading at $20.00 per share and you were researching the 22.5 - 25 strike Bear Call Credit Spread, compare that to the 22.5 - 25 strike Bear Put Debit spread

Most investors who are entering into new Debit or Credit spreads will avoid stocks that have an upcoming earnings event. This mitigates the chances of any unexpected surprises that can cause large losses for the leveraged positions. To identify stocks that do not have an earnings date between now and expiration, simply check the box in the Earnings Date field in the parameter field for 'Not Between now and Expiration.'

Before entering a Bull Put Credit Spread, check the risk-reward of the parity Bull Call Debit Spread trade. For example, if XYZ is trading at $20.00 per share and you were researching the 17.5 - 15 strike Bull Put Credit, compare that to the 17.5 - 15 strike Bull Call Debit spread.

When analyzing a debit spread be aware of your risk-reward tolerance. Deeper in-the-money debit spreads will yield a lower return but they will have a higher protection and better probability of being successful. At-the-money debit spreads will offer a lower net debit, a higher potential return, but a lower probability of earning that return.

Before entering a Bear Put Debit Spread, check the risk-reward of the parity Bear Call Credit Spread trade. For example, if XYZ is trading at $20.00 per share and you were researching the 22.5 - 25 strike Bear Put Debit, compare that to the 22.5 - 25 strike Bear Call Credit spread.

Most investors will enter a Bear Put Debit spread that has less than 60 days to expiration and where both options are In-the-Money (ITM). However, some investors will trade spreads that are further out in time, sometimes as much as 6 months, where the short out is Out-of-the-Money (OTM) and the long call is At- or In-the-Money. This approach is much more bearish and will result in a lower Net Debit, but you may have to wait longer to realize a profit. You can adjust the settings in the Search screen to identify both types of spreads.

Most investors who are entering into new Debit or Credit spreads will avoid stocks that have an upcoming earnings event. This mitigates the chances of any unexpected surprises that can cause large losses for the leveraged positions. To identify stocks that do not have an earnings date between now and expiration, simply check the box in the Earnings Date field in the parameter field for 'Not Between now and Expiration.'

When analyzing a potential Iron Condor be aware of your risk-reward tolerance. Deeper Out-of-the-money Iron Condors will yield a lower return but have a higher probability of being successful. Iron Condors where the short put and short call are closer to the underlying price will yield higher premiums, but will have a lower probability of success.

Iron Condors are a neutral investment strategy. Look for indexes, ETFs or stocks of very large companies that are channeling and do not have a history of large break outs or price spikes in either direction.

Most investors who are entering into new Debit or Credit spreads will avoid stocks that have an upcoming earnings event. This mitigates the chances of any unexpected surprises that can cause large losses for the leveraged positions. To identify stocks that do not have an earnings date between now and expiration, simply check the box in the Earnings Date field of the parameter field for 'Not Between now and Expiration.' This only applies if you are trading Iron Condors on stocks (see Neutral Positions tip #3).

Most investors will prefer to trade Iron Condors on Indexes and ETFs rather than stocks. Stocks are more volatile and can have unexpected gaps more frequently. Indexes and ETFs as a whole are much less volatile and easier to manage. Also, trading iron condors on some indexes can have tax benefits, as well...

The underlying index, ETF or stock will often increase or decrease in price after entering an Iron Condor. This enables investors to realize more potential income by rolling the Iron Condor. If the underlying increases in price, then the Bull-Put Credit Spread can be rolled. If the underlying decreases in price, then the Bear-Call Credit Spread can be rolled.

An investor should have a pre-determined exit or management point when entering an Iron Condor, and when the threshold is crossed the position should be immediately modified. Neglecting or delaying action can result in additional and significant losses.

Some brokers allow special margin for Iron Condors which can effectively double returns.