Stock Investing: What The Dummies Are Doing!

The stock market is one of the best things that you could earn a lot of money from, especially when you want to get a very high profit on something that requires less effort. Let your stocks grow and watch out for the highest point of value that it has reached to be able to earn a big profit from it. The game on the stock market is really an exciting thing do. This is one of those investments that you could really get your money be worth all the effort that you exert.

Take for instance, if you had bought Apple’s stock back around 2002, you would be sitting here reading this as a very wealthy individual. But not all investments work out like that. For every winner there are a whole bunch of losers.

Planning ahead of time for any of those stock market trades that you are about to get into, you must try to learn everything from scratch. The stock market for dummies tips will provide you a systematic procedure of techniques and methods to use to succeed well in this kind of business.

stock-investing-for-dummiesOther stock investors may have suggested that you get a stockbroker who could trail you on your decisions toward the stock market. Sometimes, it is better if you are adept with all the information that is involved so that you may know how to easily on things encountered. The stock trading for dummies will surely give you a sure watch that all the investments that you have indulged in would be earning a profit. The main agenda that you must set to yourself is the goal that you want to attain. If you have that instilled in your mind, then it is easy for you to handle any kind of stock transactions or dealings as you start off you stock trading for dummies journey.

It is very easy to learn the stock market for dummies since it is equipped with all the most important stock details and tips that would help you start whatever you find interesting to invest. Remember, the more information that you will acquire, the better that you will become in this kind of business. If you would notice, the variety of stocks really depends on how it performs in the market. It is not only the simple steps that the stock market for dummies deliver, but also the terminologies that are used is introduced in the first parts as you learn it and eventually understand everything that is involved in this very profitable kind of business investment.

Getting On The Right Side of Covered Calls on Your Stocks

Stock covered calls are a technique use by stock market investors to generate additional income from stocks that they already own in their investment portfolios. While options trading may sound scary, this technique for generating income is actually so conservative that most brokers will even let you utilize this technique in your online Individual Retirement Account (IRA).

A call option gives the buyer the right to buy a pre-determined quantity of an asset, usually a stock or commodity, at a specified price (strike price), on or before the expiration date of the option contract. A covered call option is a standard call option that the seller is covering with securities that are already owned in his trading account. Stock covered calls are merely standardized call options that are secured by the shares of stock that are already owned in the sellers trading account. Since each option contract represents 100 shares of stock, these covered option calls can only be sold (also known as writing a call option) based on full 100 share increments of the underlying stock that the option is being written against. For example, if an investor holds 670 shares of Cisco Systems (CSCO) in their account, they would be able to write (or sell) 6 stock covered calls.

Now that we’ve gone over what stock covered calls are, lets look at how to use them. Lets continue with the example of the investor with 670 shares of CSCO in their stock market investing account. Since CSCO does not pay a dividend, and the investor wants income without having to sell his stock, he decides to sell call options that will expire in two months, for a price that is above todays stock price for CSCO. In return for this option, the investor gets $1 per share, or $100 per covered option calls contract, times 6 contracts equals $600. This cash is deposited directly into the investors trading account, and can be used for whatever purpose the investor chooses. The investor is now obligated to sell the contract holder 600 shares of stock at the price specified in the contract, on or before the expiration date of the contract.

Now if the stock price does not go above the contract strike price, the investor who sold the option contracts keeps his stock, and the cash he got from selling the stock covered calls, and can do it all over again on the trading day after the contract expires. This is a very powerful concept, since it means that the investor can generate income multiple times per year by selling these call options.

If the stock closes above the price specified in the contract, usually around the date the contract expires, the contract will be exercised by the option holder, and the investor will have to sell him the 600 shares of CSCO at the price specified in the option contract. Since the contract price is above the price that the stock was trading at when the options were sold, the investor gets that capital gain profit, plus the cash that he was paid for selling the options.

While stock covered calls may seem a little complicated at first, in the end they provide you with a relatively easy way to generate cash flow on stocks that would otherwise just be sitting in your investment account.

Covered option calls are a popular way to generate recurring investment income in an investment portfolio, even in retirement portfolios like Individual Retirement Accounts (IRA‘s). This income can be generated on any stock in your portfolio that has actively traded options associated with it, the caveat being that you need to own at least 100 shares of the stock you are going to sell covered option calls against in order to take advantage of this money making strategy.

Let’s start by looking at what a call option is. A call option contract gives the buyer the right, but not the obligation, to buy 100 shares of stock at the price defined in the contract (strike price), on or before the date the contract expires (expiration date). One of the key concepts here is that the buyer of the covered option call contract would lose money if they exercised their right to buy the stock, if the stock is trading below the strike price of the contract. This is simply because they could buy the stock for a lower price on the open market, so there would be no point in exercising the call option contract under these circumstances.

In order to implement this income producing strategy, an investor will have to do a couple of simple tasks. First, the investor would have to ask their broker to set up their trading account to allow options trading. This usually involves reading a short pamphlet on the risks associated with standardized options trading, and signing a form indicating that you understand the risks. The investor will probably also have to tell the broker what options trades they want to be approved for, and their risk tolerance for these types of trades. As I indicated earlier, this strategy is so conservative, most stock brokers will even let you do it in your IRA account.

Next, the investor must identify which stocks they would like to sell options against. These stocks can have options sold against them in 100 share multiples, since each contract represents 100 shares. For example, if you own 230 shares of Apple (AAPL) in your account, you could write 2 covered option calls contracts against 200 shares of the Apple computer stock in your account. Finally, the investor needs to determine what price they would be like to write the contract for, and how long they would like the contract to be in place.

Once the investor has completed these steps, they merely need to call their broker (or login to their online trading account), and place the order to sell the covered option calls from their account. Once the sale is complete, the investor will receive cash in their account for the call options that they sold – this cash is theirs to keep.

If, at the end of the contract period, the price of the stock is below the call option strike price, then the investor keeps their stock, and can write new covered option calls against their shares of stock. However, if the stock price has risen above the strike price of the option contract, then the investor will have to sell his shares to the contract holder at the strike price specified in the agreement.

Mutual Funds, Annuities and Structured Settlements: Understanding the Differences

In the financial world, it is important to be able to know the differences between various types of financial terms. Mutual funds, annuities and structured settlements are among some of the most confused, so here are the differences between the three.

Mutual Funds

This a way for which you are able to branch out for a minute amount of cash that could not have been otherwise possible. Small investors are the ones that typically invest in these funds. Whenever you purchase mutual funds, what you actually do is get stake rights in an investment organization. There are fund managers in these firms that invests the funds on your behalf. Besides investing, they purchase and sell also whenever they deem it to be profitable.

There are other investors also that have stake rights in the exact same firm. The reason as to why such investments are viable is because cash from a huge group of individuals is accumulated and then invested. Normally, the cash investors with all that accumulated funds invest the cash by buying different stocks and bonds. It suits a lot of investors since a mutual fund is a very simple investment that offers a sizable diversity. What is great regarding mutual funds is the fact that you just need to keep an eye on a solitary investment; instead of various multiple investments. You will get quarterly or annually net profits, or might even need to payout net losses during an awful year.


This is basically an agreement normally between a client and an insurance firm. It makes for an exceptional way to obtain payouts for a set period of time or an entire lifetime of a person. An annuity can be purchased by either paying in small installments or in one lump amount. The profit advantage of annuities can be maximized immediately or perhaps deferred up until you reach retirement and is an excellent way of receiving profits in long term. A lot of individuals do not know how to properly manage investments as well as taxes and hence they resort to employing insurance firms.

The insurance firms have trained employees with the apt skills needed when it comes to knowing how and when to make a smart investment. After a preset time, the sum you used in buying the annuity will be reimbursed by your insurance firm with the aid of standard payments. The payments can be on a monthly basis, quarterly basis or yearly basis, and what is good is that, you will continue to receive the payments for the rest of your life. The insurance firm collects annuities from various individuals in order to spend in gainful ventures. The payouts to the customers are paid through the amount that is made out of the profit.

Structured Settlements

This is sort of like an insurance or financial agreement that entails regular payments referred to as intermittent payments that a person accepts out of some type of injury claim or other payout compulsion. A structured settlement is an excellent option to lump sum payment. A lot of victims of accidental injury prefer getting these settlements as opposed to a lump sum amount since it makes for a suitable way of getting compensation for an extended duration of time or possibly even for an entire lifetime.