Penny Stock Picks – Do Penny Stock Alerts Really Work?

Since I’ve started trading penny stocks, everyone is always asking me how penny stock picks and penny stock alerts work and IF they really work or if they’re too dangerous to actually trade. Well, the truth is it’s a little bit of both.

First of all, let me explain what a apenny stock alerta actually is. Penny stock alerts are what newsletters send out to their readers to let them know about hot penny stocks. You know, like a penny stock that’s on the move. These can be takeover rumors, unusual trader activity, insider trading, good news, rumors, undervalued companies, etc.

When the newsletters find something that they think can make you money, they sound you out an email. Does it work? Definitely. Some of the picks I’ve seen have gone up hundreds or even thousands of percent in days, sometimes even in one day. So if you’re wondering if it works, it most certainly does.
Then of course it sounds a little too good to be true, which brings on the next question I always get, is it risky? The answer again isadefinitely. Penny stocks are very volatile, which means they can move up very rapidly and make you a ton of money. They can also move down very quickly, and cost you money as well. So they are certainly risky little fellows.

So knowing that it DOES definitely work, but that it is also risky, the final question isais it worthwhile? Well, unfortunately I can’t answer that for you. What I can do is tell you that for me it’s been extremely worthwhile. I’ve made hundreds of thousands of dollars from penny stocks. In my opinion the key is risk management, you’ve absolutely got to make a plan and stick to it. Realize that some of these ahot penny stocksa are actually going to be losers, so be prepared to cut your losses if the trade goes against you. The majority are going to be winners, so be sure to sell all or a portion of the stock while you’re up, so you can guarantee you make some profits. Don’t be too greedy!

Some of these penny stocks make huge runs, but then fall back down. So you never want to wait until they fall to sell them. In my own personal opinion, I think if you’re up 50-100% you should sell. You may miss a big 300% run, but you’ve still guaranteed yourself a big profit. Also, don’t EVER let a trade go too far against you. Most people I know will let themselves go down about 15-20% if the trade goes against them. If half the penny stock picks are winners and you make 50%, and half are losers and you lose 20%, wellayou do the math. From my experience, more than half the picks I’ve been trading are winners so usually the math works out a lot better for me.

There are a few good sources of penny stock picks that I’ve found. I think the most reliable and consistent free service is http://pennystockalerts.com/

Many people wonder whether or not buying stocks is a good idea. Those who do not take part in investing may feel that buying stocks is not a good idea because there is risk to it. Well, this is right; there is risk to buying stocks. When you buy stocks, you are hoping that the price of the stock increases, that way you can sell the stocks for more money. For example, if you buy one share for $20 and that share doubles in price, you make $20 off your investment. Now, if you had 10,000 shares at $20 and it doubled in price, you would make $200,000. Is it any surprise that one of the richest men in the world, Warren Buffet, has been able to make so much money through investing?

However, buying stocks is something that can help you greatly in your life when you do it right. When you are buying stocks without a broker, or you are buying stocks with a discount broker, you can make good money by investing in the stock market.

If you go to the stock market and start investing without doing research, you will only end up losing all of your money. All of the steps to buying stocks include a step for research because it is so incredibly important. When you research stocks, you can determine what stocks will go up and what stocks will go down. You won’t know exactly what stocks will go up or down, but at least you will have a better idea of how stocks will do. When someone asks “Is buying stocks suggested in articles smart?” the only answer that we can give is yes. Various websites have been designed to help give you an indication of how stocks are going to do. These websites do the research and give you the scoop on what is going to happen so that you can begin to make a decision about how to invest.

Does this answer the question of whether or not buying stocks is a good idea. Well, yes buying stocks are a good idea and here are just some of the reasons why.

1.When you spend most of your working life investing, you can make a lot of money. When you have 40 years before retirement, you can invest heavily in your youth because you have more time to make up for falls in the stock market. In the long-run, buying stocks gives higher rewards than other types of investments.

2.When you invest in the stock market, you make money for doing nothing. You work at a job and you make money when you are at the job, but with stocks you make money even when you are sleeping. The stocks go up and down without you doing anything. It is all based on the work of others. When a company does well, you do well. It is possible, on a rapidly increasing stock, to make double or three times what you make a year at your job, without having to do anything but invest.

3.While there are risks to investing, buying stocks is not gambling. People will often ask what is the difference between buying and selling stocks and gambling, and to that we can say that with stocks you do research, while with gambling it is all about luck.

Buying stocks is something that can help you make a lot of money when you do it well. Buying stocks is a good idea when you do your research because you can make a lot of money. Of course, there is the chance you will lose a lot of money on the stock market, but there is just of much of a chance that you will make a lot of money. Fortunes are won and lost on the market on a daily basis.

So, is buying stocks a good idea? If you do your research and put a lot of thought into buying stocks, then yes it is a good idea. If you are picking stocks at random, then it is not a good idea. This is what you need to remember with investing in the stock market.

Top Penny Stock Books

The Penny Stock Propheta”a”another hand for you to make wealth. Do you have this time when you come across a chance, you fell deeply troubled, because you have no idea that the chance means an opportunity or a crisis. To make the question more cheer and bright, take the penny stock market for example .Everyone holds the dream that obtain abundant money with effort-less sweat. While the clever you should realize that not everyone can be a lucky dog. Don’t be disappointed, this time you can make you dream come true, only through the guide of the Penny Stock Prophet.

There are many lively examples can prove it. James Connelly created a algorithm to analyze the trend of the stock market quotation, and in very shortly time he harvest a big surprise. Then he makes his secret open and help his family and friends acquire a great profit. The key is how to identify the critical moment, that is should buy or sold your stock .is definitely a difficult choice. When you fell vexed, don’t worry, resort the Penny Stock Prophet to find help, lately you will understand yourself make what a wise move.

By providing the stork recommendation and alarming signal, the client can through the first hand information make his decision according to their own conditions.

May be you will worry the accurate and the practicality of the analysis ,the money back guaranty can give you confidenceaHence the investment is truly worthwhile .As we know, the stock market is transitory, once the pivotal moment you don’t seize, the loss will be quite heavy .So the effect of the Penny Stock strategy can be prominent with the float of the price, which can tell you when and where the key buy or sold point,especially the specific number. Don’t hesitate, chose the convincing a pleasant surprise Prophet to give you a leg up. We have the reason that the day you have the courage to chose Penny Stock Prophet is the day you achieve fortune and a pleasant surprise. Grab A Copy Click here

Bullet Advisory Indian Stocks Weekly-expectation of reforms in the key sectors will drive the markets in near term

BSE Sensex (13887.15) and Nifty (4238.50) closed 14.1% and 15.4% up respectively last week. Nifty OI Put Call Ratio was 1.17. Nifty Future May was quoting at 10.50 points premium.Nifty Call Option June 4400 was very active.Support for Sensex is at 13270 and Nifty at 3770.Resistance for Sensex is at 14700 and Nifty is at 4600.Crude oil was at 61.00$.

Market rejoiced the thumbing majority of Congress in the union election and registered well gains.Allocation of key portfolio likes finance and planning are awaited.Market expects the Government to go ahead with divestment programme.

ICICI bank and RIL added Open Interest in May Series.TVS Motors and Union Bank shaded Open Interest.Huge position was build up at RNRLMay Call Option Strike Price 75.Good build up was also seen at NTPC May Call Option Strike Price 210.

Tactics for Future Option players.

1)Nifty(4238.50) Lot Size-50

Sell One Call Option of June Strike Price 4500 @97.00 Rs.

1. Premium .Paid=176*50=8800.00 Rs.

Premium Received=.97*50=4850.00 Rs.

Net Premium Paid=8800.00-4850.00.=3950.00 Rs.

Maximum Profit=4500-4300=200*50=10000-3950=6050.00 Rs.

Maximum Loss=3950.00 Rs.

Break Even Price=4379 .

2)RPL(137.45) June Future-Lot Size 3350 shares.

Buy One Lot JuneFuture @137.45 Rs.

Sell One Call Option of June Strike Price 140@10.90 Rs.

Premium Received=10.90*3350=36515.00 Rs

Maximum Profit=140-137.45=2.55*3350=8542.50+36515.00=45057.50 Rs.

Max Loss=Unlimited.

Trading Idea

1. 1)Reliance Capital(900.60)Buy this Stock in decline and trade

2)Biocon(175.55)Buy this Stock in decline and trade

Trend of Major Stocks

STOCK TREND Days WeeklyTrend MonthlyTrend

1. BHEL.NS Bearish 2 Rising Rising
2. ICICIBANK.NS Neutral 1 Rising Rising
3. INFOSYSTC.NS Bearish 4 Falling Rising
4. ITC.NS Bearish 4 Falling Rising
5. MARUTI.NS Bearish 2 Rising Rising
6. SBIN.NS Neutral 1 Rising Rising
7. TATASTEEL.NS Bulllish 5 Rising Rising
8. TCS.NS Bearish 4 Falling Rising

Technical indicators of major Stocks

MFI=Money Flow Index

RSI=Relative Strength Index

ADX=Directional Momentum Index

STOCK CLOSE MFI-21 RSI-14 ADX-14

1. BHEL.NS 1978.2 50.47 63.46 34.46
2. ICICIBANK.NS 702.65 62.88 67.88 44.26
3. INFOSYSTC.NS 1522.3 35.45 51.64 35.22
4. ITC.NS 183.6 27.44 46.49 22.15
5. MARUTI.NS 961.95 65.27 63.07 33.95
6. SBIN.NS 1732 49.62 72.86 32.59
7. TATASTEEL.NS 363.65 52.59 71.23 35.69
8. TCS.NS 634.05 29.51 52.09 36.95

By

Bullet Advisory Indian Stocks-India’s top most no.1 best stockmarket advice blog,hot stocktips calls by expert technical analyst Narendra Nainani of India.Most preferred paid subscription stocktips callswebsite of India.Excellent success ratio of more than 90% with superb trading ideas.

Website http://www.narendranainani.blogspot.com

Website <a rel=”nofollow” onclick=”javascript:_gaq.push(['_trackPageview', '/outgoing/article_exit_link/932874']);” href=”http://www.narendranainani.blogspot.com”>NIFTYOPTIONS </a>.

M-+919898162770

Indian stock market have crashed more than 1100 points on Nifty till now in February 2011. Our previous future predictions on the market did well. After the crash now investors are asking, whether its time to buy n jump in the markets? I received few queries asking if the market crash in Indian stock over yet? Where is the stock market going to go, where is it headed now?

Retail Investors is not at a much loss this time around, they have been rather away from the markets being skeptic about it. Many investors were waiting on the sideline for the markets to cool down before they enter buying in the market.

Crude Oil prices cooling down, Mubarak resigned Inflation will come down, IIP no.s will improve, markets have corrected the excess valuation of share prices.

Start of a new Bull Market Or Has The Bear Market already started in Indian Stocks??

I certainly doubt if we will see a bull market anytime before May 2011. India is facing problems of its own like the 2G spectrum scam, ISRO Scam, Financial scams, Fiscal Deficits, rising commodity prices etc. Another problem is the confidence of serious investors which has weakened because of issues like Corporate Governance and such investors are not easy to convince.

Any issues related to the corporate governance, investors will simply dump those stocks and such stocks may see insane share prices. After all the governance makes or breaks a corporate and investors trust is bound to lose.

Indian Markets could be headed for a crash post budget 2011. On the downside markets may test 4500-4600 levels on Nifty and close to 15000-15500 on Sensex looks like a target market is preparing for.

I am also concerned over some global issues and I think the markets worldwide are going to go through another phase of bear attacks. Shall be discussing those global concerns soon which the U.S markets have been ignoring.

Fundamentalist Would Find Stock Price Valuation Attractive & Would Advice You To Buy Stocks

You already would have got buy calls from fundamental analyst who must have shared a stock advice with you to buy something or the other saying that the share price is cheap, attractive valuations, eps n blah blah blah a

Before you take any serious actions on the basis of such mentalist’s, I feel its my responsibility to give you the early, but the “last warning” because Stock Markets Globally are set to see the biggest crash we have already seen till now in 2011 and most likely to happen in March post budget, carried forward till April 2011.

There are some things which Fundamental analysts cannot foresee or predict which is known as so un-predictable. To foresee in the future and forecasting it correctly is anyway a unique and rare ability after all.

There’s other important issues as well which are to be taken care of than just reading the financial books, accounts of a company and share prices in markets knows it all, since markets starts discounting everything in advance. Read how we successfully been predicting markets.

Foreign Institution Investors (FIIs) Would Be Selling More After Temporary Rise

FIIs invested $30 Billion in 2010 and during this time everything was moving up fast since the liquidity kept chasing stock prices. Till now FIIs been able to sell only $2 Billion of stocks and prices have already corrected this much. Do you think they wanted to sell only for $2 Billion and made share price correct this much?

One reason why its not easy to sell is because markets lack buyers, theres no depth in the market, spreads are big. Share prices reacts (falls) too fast on small quantity of shares been sold, resulting in non-favourable situation for Investors to sell.

Mutual Funds (FIs) have been buying past few days and have bought equity of worth $1 Billion and all this while FIIs were selling.

Basic idea is that a big net worth investor cant sell until n unless theres enough money and buyers in the market whom he can dump his stocks.

What Big Investor Needs Is Scapegoats (Convinced Buyers – Bulls) To Offload Stocks

Markets cant keep falling or rising without breaks, commonly known as pullbacks or correction. We have seen enough pullback on Indian stock market leading indices and stocks prices.

Many sees it as a buying opportunity to shoot there guns buying stocks. A continued pull back/short covering rally to levels up to 5550-5600 on Nifty would convince buyers even more and then no one would be talking or thinking about downside risk in market.

Human Psychology and Human Emotions Drives Direction In Stock Market

The human psychology behind investing and trading stocks is the combine force that moves the stock market. A stock chart is nothing more than a picture of human emotions – fear, hope, greed and Euphoria. All these emotions gives direction to prices in stock market.

Price moves makes people change there mind and markets can’t fall without euphoria in investors. When people will get buy calls on media business channels, newspapers, websites etc and seeing the prices going up, they might feel they are missing and then will get tempted to buy.

When they see there buying going right in the right direction, they get further convinced and rather than selling, they would do the just opposite – Buy More!

That state of mind is the psychology markets are going to create in investors mind in the coming days left till budget. Post budget expect bears to re-attack.

Price Is The Only God In Stock Market and Prices Are Given Direction By Humans Like You and Me

To Be Continued aa

Penny Stocks Twitter

The key to trading penny stocks is learning how the game is played. The game has always been and will always be controlled by the MM’s (market makers) These are the people we used to trust to make a market for any stock even in the roughest times.

However times have changed especially in pennystocks, Very little regulations and oversight has turned these market makers into nothing more then market manipulators, manipulating any penny stock however they see fit for personal gaines.

Now most smart investors have learned you can’t beat them at their game. They have to much power and control. The best we can do is watch them and learn their patterns, Each MM has its own style of manipulating. and they will react in their own predictable way to different situations. Once you learn this you will truely have the advantage.
Trading penny stocks is much like playing a game of chess against these MM’s. If you know their techniques and strategys then you can easily predict where they will take a stock.
Watch them carefully on L2 , and watch charts at the same time you will see some MM’s react to certain indicators, some only react to buy and sell pressure. And some even work in teams and are truely there to take as much money as they can from you using all the dirtiest tactics including naked shorting, Paid message board bashers, and fake PR releases. (I.E. PUMA, NOBL, SSGI, STXG, CHDN). If you are in a stock with them you are in trouble take profits fast and get out , they will NSS it down to nothing faster then you can blink an eye.

And don’t trust for a second any of the so called guru’s from twitter, ihub, or various pennystock chatrooms and msg boards. Most are in for personal gain by frontloading and pumping and many are even paid promoters, paid with stock that they dump on you while alerting the hot trade.
Although there are a few that are like me Alerting only The hottest Penny stocks on twitter that will sift through all the pumps and dumps and promotions. From all the Message boards, Newsletters, Chatrooms, and Tweets. and alert you to only the best penny stocks and also tell you why they are running and what to expect next.

PennyDealer
Penny Stocks twitter

http://thepennytrade.com
Penny Stocks Alerts On Twitter Follow us on Twitter http://twitter.com/STOCKSWAGER

Quest Oil Corp. (PINK: QOIL.pk)

On Friday, August 06, 2010, Quest Oil announced that it successfully completed the acquisition of B&B Oil, Inc. In an all share exchange transaction, Quest Oil acquired all of the outstanding shares of B&B Oil, a private, independent oil and gas exploration and development company based in Fredericksberg, Texas. Quest Oil now holds a 100% equity interest in and title to B&B Oil’s assets.

In management’s view, B&B Oil’s assets in the Midkiff and Hawkeye Fields in Texas are economically attractive and geologically sound properties that have significant upside development and revenue potential. From 2007 to the present, B&B Oil acquired oil and gas leases that consist of approximately 560 acres in Quest Oil Corp. (PINK: QOIL
Hawkeye QOIL.pk
Field and approximately 398 acres in the Midkiff Field in Eastland County, Texas. These properties include wells that are currently productive, and numerous prospects that management believe warrant further exploration and development. Productive wells on the leases will require relatively modest capital expenditures to generate cash flow from production.

Quest Oil‘s goal is to proactively minimize risk by teaming with experienced exploration companies and project operators, and leverage their local experience and knowledge. Quest Oil seeks to strategically build wealth from mature prospects with proven reserves. Accordingly, QOIL.pk
we plan to maintain an aggressive M&A growth strategy, which will include the acquisition of small to mid-tier oil and gas exploration companies with significant growth potential.Quest Oil believes that there is significant opportunity in the acquisition of mature prospects in mature oil fields that generate smaller output. The major oil companies and the large independents have divested Quest Oil Corp. (PINK: QOIL
of these assets in favour of larger potential oil and gas plays, even though these prospects possess significant proven reserves. With the strength in oil prices, and with gas prices steadily improving, there will continue to be ample opportunities for smaller independent companies such as Quest Oil to acquire and develop these mature petroleum leases and to build significant production volumes and revenues.
http://thepennytrade.com

LFBG Continues to Move Higher.

Nov 6th, 2010 Boca Raton, FL- TheStockwizards.net a free hot penny stocks picks alert blog newsletter that gives you up to the minute real-time detailed financial information such as LFBG with quotes and chart updates on the OTC-OTCBB, NYSE, and NASDAQ.

TheStockWizards.net Weekly Top 10 penny stocks includes: LFBG, BLLD, KEPI, SIBN, GVDI, LOCN, PCFG, LTHU, SRSR, and LBAS.

(1) LEFT BEHIND GAMES INC (LFBG:OTCBB)
LFBG has been a major home run for our subscribers. The stock continues to make higher highs and higher lows. Closing in on the psychological .01 resistance level.

Left Behind Games Inc. doing business as Inspired Media Entertainment, engages in the development, production, and sale of Christian inspirational personal computer video games in the United States.

(2) BULLDOG TECHNOLOGIES INC (BLLD:OTC)

Up over 100% since starting coverage in our morning business penny stock report. Traders and investors will be focused in on the last resistance level of .039.

Bulldog Technologies, Inc. engages in the development, manufacture, and sale of security systems for the cargo transportation industry primarily in the United States and Canada. It offers ‘Bulldog Online Security Systems’ (BOSS), which is designed to prevent cargo theft from cargo containers, tractor-trailers, cargo vans, tanker trucks, storage year containers, and other cargo transportation and storage equipment.

(3) CLEAN ENERGY & POWER INC (KEPI:OTC)

Traders and investors are attracted to the low float share structure of KEPI and are anxious to see if the stock can hold the psychological .01 cent support area this week.

Clean Energy & Power, Inc.operates in the alternative fuels and clean energy industry. It identifies developed environmental projects with potential commercial application; and deploys, oversees, and controls operations. The company focuses on solar, algae-to-fuel, clean coal, wind power, and waste-to-energy projects.

(4) SIBERIAN ENERGY GROUP INC (SIBN:OTCBB)

SIBN had a nice breakout above its 200-day moving average this week. The stock is in the right sector. Energy commodities are on fire.

Siberian Energy Group Inc., a development stage company, engages in exploring oil and gas properties. It owns Karabashsky-61 and Karabashsky-67 blocks covering 166,000 acres located in Khanty-Mansiysk Autonomous Region, the Russian F with ederation.

(5) GOLDEN VALLEY DEVELOPMENT (GVDI:OTC)

GVDI had a nice breakout coming out of a nice solid base. The stock took out the its most recent highs of .025 cents. This will be a major support level for the longs this coming week.

Golden Valley Development, Inc. isin the process of merging with a Real Estate Development company. The new company will continue to operate as Golden Valley Development. With over 20 million dollars invested into development projects, the new Golden Valley Development is a front runner in the Real Estate Development sector.

(6) LOCAN INC (LOCN:OTC)

LOCN has been a major winner for TSW subscribers. The big question this week is whether or not the stock can consolidate above the 10-day moving average? If this occurs, LOCN could shock a lot of traders. Major support will be the .10 – .12 areas.

Locan, Inc. does not have significant operations. The company intends to acquire or merge with one or more businesses or business opportunities. Previously, it engaged in the production and distribution of ready-to-eat sandwiches.

(7) PACIFIC GOLD CORP (PCFG:OTC )

A major winner for followers of the TSW nightly penny stock business report’s. With gold closing at record highs this past week, stocks like PCFG will continue to be in play.

Pacific Gold Corp. engages in the identification, acquisition, exploration, and mining of mineral properties, primarily gold and tungsten, in the United States.

(8) LITHIUM TECHNOLOGY CORP (LTHU:OTC)

LTHU had a nice close above the 200-day moving average for the week. A close above the .036 level could send the stock higher. Nice chart formation.

Lithium Technology Corporation manufactures and provides rechargeable energy storage solutions for various applications. The company has for many years been a successful provider of large-size energy storage systems. GAIA lithium ion cells offer excellent power and energy densities in large-size batteries.

(9) SARISSA RESOURCES INC (SRSR:OTC)

If you’re a bottom fisher investor, SRSR might be for you. The stock is trading at the bottom of it’s range and has a history of making nice runs over the last several years.

Sarissa Resources Inc. is a junior exploration company with interests in properties with base metal, precious metal, uranium, niobium and rare-earth prospects in Northern Ontario, Canada. The Company is specifically focused on the development of its Nemegosenda niobium project.

(10) LOCATION BASED TECHNOLOGIES (LBAS:OTCBB)

LBAS closed right at its 200-day moving average. We could see a technical breakout. This stock has a history of making big moves over the last several years.

Location Based Technologies, Inc. designs, develops, and markets personal, pet, personal property, and vehicle locator devices and services primarily in Canada.

About the Stock Wizards.net

TSW is looking for hot penny stocks exposed such as lfbgon the move showing unusual movement that could end up being a popular top performing HOT OTC small cap penny stock picks such aslfbg. We know traders and investors are looking for exciting hot penny stock picks alerts likelfbgalong with OTC volume movers to put on there speculative watch list for review.

The TSW penny stock finder trading system locates the best small cap, micro cap penny stocks such as lfbg that have unusual movements with news, popular small cap penny stocks with big gains, and strong stock trends.

TSW looks for exciting, explosive penny stock picks likelfbgwith the right mixture of powerful volume and low market capitalization to give day-traders & investors an opportunity to build a penny stock picks trading watch list consisting of the most notable penny stocks like lfbgthat have high volume with positive change that can become explosive mega volume penny stock picks at any given time.

Disclaimer: The assembled information distributed by TheStockWizards.net is for information purposes only, and is neither a solicitation to buy nor an offer to sell securities. TheStockWizards.net does expect that investors will buy and sell securities based on information assembled and presented herein. TheStockWizards.net will not be responsible in any way for or accept any liability for any losses arising from an investor’s reliance on or use of information obtained from our website or emails. Always do your own due diligence, and consult your financial advisor

Discloser, Disclaimers

TSW has not been compensated for this report.

LFBG Leads Weekly Top 10.

To illustrate this technique, let’s take a look at the prices for NYSE/Euronext (NYX),

as of March 4, 2009 market close:

STOCK COST/ SHARE: $16.36

ANNUAL DIVIDEND: $1.20/SHARE

DIVIDEND YIELD: 7.33%

CALL EXPIRATION DATE: JAN. 15, 2010

CALL STRIKE PRICE: $17.50

CALL PREMIUM: $3.25

STATIC CALL YIELD: 19.86%

TOTAL STATIC YIELD: 27.19%

TOTAL POTENTIAL ASSIGNED YIELD: 34.16%

As you can see from the yields in this example, this stock’s 19.86% call selling yield is 2.7 times its dividend yield of 7.33%. So, even if they were to cut their dividend, the investor in this example would still have nearly 20% downside protection. If the dividend remains intact, the downside protection in this trade is 27.19%, equivalent to the total static yield, (the combination of the dividend and call yields).In addition, by selling a call at the $17.50 strike price, approximately 7% above the $16.36 cost/share, this investor also has the potential to for a total assigned yield of 34.16%, making a very compelling case for this strategy.

Trade Summary for this Example:

Breakeven: $11.91

Maximum Share Reselling Price: $17.50

Static Yield: $435.00

Potential Assigned Yield: $559.00

Investment Term: 10+ months (The Annualized Yields would be even higher than the yields listed above).

Definitions:

Static Call Yield: The yield realized when the underlying shares are NOT assigned/(sold) at or before expiration. In a “static” scenario, the stock’s share price doesn’t rise above or close enough to the combination price of the strike price, plus the call premium, to make it worthwhile for the shares to be bought by the call buyer on the other side of the trade. In the above example, the share price would have to rise above or near $20.75, ($17.50 strike price plus the $3.25 call premium), to make it worthwhile for the call buyer to exercise his option to buy your shares.

Total Static Yield: The combined dividend and static call yields.

Assigned Call Yield: The yield realized when the underlying shares ARE assigned/(sold) at or before expiration. This normally occurs when the stock’s share price rises to or above the combination price of the strike price, plus the call premium, causing the shares to be assigned, (sold), at the strike price, which in the above example is $17.50.

Risks and Limits: As with any investment, there are risks. Obviously, this strategy can’t guarantee that these stocks won’t decline further in value once you’ve bought them. However, this value-based, “double dividend” covered call strategy will at the very least give you more downside protection than if you had only bought the stocks outright, and the call premium lowers your cost basis.

Upside Risk: Since this strategy quantifies the upper limit of your profit potential, you should be aware that, even if the stock appreciates far past your strike price and call premium, you’ll still be obligated to sell it at your covered call strike price, which places a limit on your profit potential. It’s usually wise to research the call’s theoretical value in an options pricing model, such as Black-Sholes, before placing the trade, to ascertain the chances of the call ending up in the money at expiration. You should always analyze your static and assigned gains, and breakeven point before placing any Covered call, (Buy/Write), strategy. Many of the online brokers have automated options pricing calculators that simplify this process.

Downside Risk: The biggest risk factor in selling covered calls is that you are putting much more money at risk here than by merely buying a call option. However, research has shown that the odds tend to favor option sellers over buyers. You should make sure you research any stock thoroughly before executing this or any other strategy. However, as noted before, if the stock declines past your breakeven, you should be able to offset some of the loss by “buying back in” your sold calls at a profit, and perhaps rolling into a lower strike price call, if you want to maintain your underlying position.

copyright 2009 DeMar Marketing. All Rights Reserved Worldwide. This article was written for informational purposes only. Readers should not make any investment decisions based solely on the information in this article.

Stock ticker symbols are used to identify individual stocks with three to five letter codes. These letters are usually alphabets. Many novice investors don’t know the fact that many secrets are hidden in these symbols. By just looking at these symbols you can know about the company, it’s nationality or it’s parent country, where it gets traded like NYSE, NASDAQ, AMEX and others and most important the financial health of the company.

In the past each stock exchange in US had its own stock ticker symbols. This would confuse investors and traders a lot. Standardized symbols were introduced by Standard & Poor as a way to clear that confusion when referring to stocks. Hey, this is the same Standard & Poor that maintains the S&P 500 Stock Index, considered to be the barometer of US economy.

Now, when we see MSFT on CNBC or for that matter Bloomberg TV, we immediately recognize Microsoft. Similarly when we come across GOOG, we immediately recognize the internet giant GOOGLE!

In 2007, things changes again with a new SEC ruling. Previously, the length of the stock ticker symbol would tell where it got traded. For example, NYSE or AMEX had a three letter stock ticker symbol system. NASDAQ had a four to five letter stock ticker symbol system.

What this new SEC ruling did was it allowed the companies to change the exchange where it’s stocks got traded while keeping the old ticker symbol. Now, you will find the stock exchange also listed with the stock ticker symbol. For example you will often see ticker symbols like these NASDAQ:MSFT. This symbol tells you that the microsoft stocks get traded on NASDAQ.

Sometimes, you will come accross stock ticker symbols that have five letters. Why this is done?

This is done to alert the investors and traders that the company has not filed its reports with SEC. This is an important message to the market that the company is facing problems and is unable to compile with the mandatory filing of financial reports with SEC. Once this message goes accross to the market, you can imagine what can happen. Clearly the stock price will take a plunge. So not filing a timely report with SEC is like committing financial suicide.

Penny stocks that trade on pink sheets or OTCBB ( Over the Counter Bulletin Board) also add a fifth letter code to the ticker symbol whenever applicable. NYSE does not add an additional letter to its three letter stock ticker symbol. What NYSE does is to use behind the dot codes that follow the regular ticker symbol.