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Archive for March, 2010

Make Money At Home Selling Call Options

This article will explain the “nuts and bolts” of selling call options. This is a method that investors employ when they believe that the price of the underlying stock will decrease below their option strike price (prior to the expiration date). You can either utilize this method if you own the underlying stock (covered) or don’t own the underlying stock (uncovered or naked). The latter strategy of selling naked calls is similar to renting something you don’t own; the appeal of making immediate money without investing capital (although risky) is the strength of this option strategy.

If you plan on selling calls, you will need to fund a brokerage account with a minimum of $2,000 and agree to the terms of a margin account. A margin account is a necessary evil if you want to sell calls as there are strict federal and brokerage firm regulations regarding the minimum balance that must be maintained in one’s account in order to execute this strategy. Typically, the margin requirement (account balance) is 20% (in cash or stock value) of the strike price and 100% of the premium received. If the price of the underlying stock increases too much and you DON’T OWN THE UNDERLYING STOCK (naked), your minimum balance requirement will increase and you will get an alert notification (margin call) from your broker requiring you to deposit more funds, liquidate other stock, or close your position by buying-back your options (buy to close) at a loss. If you do not address the margin call within 2-3 days, the brokerage firm will liquidate other stock or assets (without your permission) in order to bring your account into compliance.

As you can see, selling naked calls can get ugly very quickly. I actually recommend buying stock in companies that you want to own for the long term and selling covered calls against them; you’ll sleep better, trust me.

Now that you’re all set up, here’s an example of how the strategy works:

Let’s say that it’s March and you sell ten (10) contracts (1,000 shares of underlying stock) of a call option expiring in April (third Friday) for XYZ Company at an “out-of-the-money” strike price of $50 and an option price of $1.50 / share; the stock is trading at $49 / share. You make $1500 immediately ($1.50 X 10 contracts X 100 shares / contract).

Now let’s see how much of this money you can keep:

Scenario # 1:

If the price of the underlying stock decreases below your strike price prior to the expiration date, you keep all your money and the buyer’s call option expires worthless. Congratulations, you have done your homework and were successful at making money at home! You can do this again the next month (kind of like rent) and make money at home for doing virtually nothing. However, before you get too excited, it’s not always that easy to make money online.

Scenario # 2:

If the price of the underlying stock increases above your strike price at the expiration date, one (1) of the following will occur:

1. If you own the underlying stock, your brokerage firm will sell it at the strike price; hopefully, you sold the call at a strike price higher than your stock purchase price. I actually prefer to buy the underlying stock at bargain prices, during recessionary times (like now), and make money by selling calls (20% – 30% higher) when the stock is trading 20% -30% higher. The worst thing that can happen is that you sell your stock 20-30% higher than your purchase price and you can’t execute this strategy next month.

2. If you don’t own the stock (naked call), you will want to buy-back (buy to close) your call option (thereby closing / canceling your position) and excusing yourself from all responsibility to buy the stock at the higher market price. The amount you pay for your call will depend on how high the price of the underlying stock rises above your strike price. In most cases, you will end up paying more money than you received.

Remember, if you don’t close your position, you will be required to buy the stock at the higher market price in order to sell it to the option buyer at the lower strike price. If you don’t have either 80% of the value of the stock in cash or other stock that you can liquidate for cash, you will need to add more money to your account.

Now if you’re like me, you’re probably thinking that making money by selling covered calls against stock that you purchased at 20% discounts is the safest strategy. I happen to really like this strategy if I can buy stock, during recessionary times (like now), in companies that have shown exciting earnings growth (in the preceding quarters) and have new products or services.

If you want to sell covered calls and capitalize on this recession, my recommendation is that you find a way to make money in order to buy the stock now. I can show you an online home business that actually made me the money to invest pretty quickly (if you like). I know, I know, I by no means am a home business type of guy, as stock and option transactions are my passion! What I found though was a simple and structured online home business strategy that actually began to make me real money. It’s called the “Independent Profit Center” (IPC) and it happens to be one of the best online strategies, along with a few of my favorite “spread options”, that I’ve seen to make money at home.

What makes this opportunity so unique is the training and support that the company provides; there are no confusing books or CDs to contend with. All training is conducted via a 5-hour video webcast that shows you exactly what and how to make money with this business. You will literally have your website up within an hour and be making money within 24 hours.

IPC doesn’t hide anything from you and you know exactly what this business is about before you apply. If you go to my website, you can join a FREE webinar LIVE online and see why IPC is such a smart and profitable decision that will make you money at home. I guarantee that after seeing this webinar you will be blown away by the potential of this new program to make money online. I was and have been making money at home ever since.

IPC is a legitimate home business that truly works for the average person. The training, support, and proven system are all packaged in a way that will make you significant money online within 30 days.

For more information, please feel free to visit my IPC website at http://www.ExtraIncomeExtreme.com or if you have money to invest and want to double your money in one (1) year visit http://www.squidoo.com/options103

You could also visit my “Stock Market Crash Course” Blog at http://www.StockMarketCrashCourse.blogspot.com/ for ten (10) simple ways to trade options and make money at home.

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Refinancing mortgage loan is one of the best debt consolidation options available in the market if you already have a mortgage loan. None of us wish to have debts in our financial profile. It is a possibility that due to any emergency in the past, you have accumulated several high interest loans to cover yourself but that can harm your monthly bills in a big way. However, if the cloud cover of debt is more than you can handle monthly as well as your monthly expenses are more than you are earning currently, then you should seriously look to consolidate your loans as early as possible. You should not look for a miracle next month.

If you have a good repayment track record then you can easily apply for a refinancing mortgage loan where you can get a loan up to 125 percent of the current appraised value of your home. The repayment duration of a refinanced mortgage loan is usually 5 to 25 years with comparatively lower interest rates. Due to this nature of the loan, your monthly bills will certainly come under your control and you can plan for better cash flow habits.

Now considering, you have your refinanced mortgage loan for your debt consolidation needs, you need to make a monthly budget for yourself and organize your monthly cash flow in an effective manner. You can also take help of an experienced financial planner in this regard. A debt consolidation loan should be your last debt in your life, as there is nothing like a good debt or bad debt. As per my experience, unless you have an enterprise where you need cash to expand your business, you should not opt of a debt to fulfill your daily needs.

Vikash Kumar is the webmaster of http://DebtConsolidationDetails.com who loves to share important Debt Consolidation Tips, News and Tips in an effective manner.

You can have free subscription here for the latest information on Refinancing Mortgage Loan Debt Consolidation

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Free free government grant info could be accessed from major grant-giving federal agencies. Free free government grant info could also be found in various government and non-profit websites, depending on your need.

One important source of free free government grant info is the Catalog of Federal Domestic Assistance (CFDA). The free free government grant info could be viewed from the CFDA’s website http://www.cfda.gov/. The free free government grant info found in this site lists all the grant and assistance programs approved by Congress.
CFDA’s free free government grant info is popular among active grant-seekers. The amount involve in CDFA’s list as provided by Congress are usually huge running up to billions of dollars, hence the reason for its popularity. But they are also difficult to secure. With a number of organizations vying for the same funding at the same time, competing for these government funds could be stressful and expensive. Preparing for grant application alone could take a lot of time and money. Not to mention loads of obligations later on for the successful grantees.
Free free government grant info could also be found in the recently launched e-government website GovBenefits. The free free government grant info found in GovBenefits is aimed at eliminating welfare bureaucracy and to give more efficient, fast service to the citizens. Free free government grant info at GovBenefits can be accessed at http://www.govbenefits.gov/. Free free government grant info aside from GoveBenefits could be found in other online federal grant resources such as Grantsnet, Non-profit Gateway and The Foundation Center.
Free free government grant info for students could be found at the “Free Application for Federal Student Aid (FAFSA)”. FAFSA’s free free government grant info includes loans, free grants and campus-based student aid programs. FAFSA can be filled up online or on paper. FAFSA provides all free free government grant info you need about student grants. FAFSA’s website is http://www.fafsa.ed.gov/. Online FAFSA free fre government grant info application is preferable because it is not only faster but also easier. An estimated 500,000 applications using FAFSA online availing of free free government grant info was lodged in the three-month period Jan. 1 to March 1, 2002 alone. An estimated $67billion was released by the Department of Education for student aid programs. You can also check the eligibility requirements for student grants and loans through the FAFSA website.
For people who want to establish small businesses or expand an existing one free free government grant info could also be found in the US government’s Small Business Administration (SBA). The official website for SBA is http://www.sba.gov for free free government grant info. SBA’s free free government grant info is not only limited to free grants but also free free government grant info on lending options and technical training, assistance and counseling extended to small businesses.
Free free government grant info are a valuable source of information on securing and spending government’s grant money. Making the most of these free free government grant info could ensure that the money will go to the projects intended and will redound to the benefit of the people.

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