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You should not follow any recommendation made by an analyst on the future outcome of a stock's price or earnings because that is not what they get paid for or get fired over. The bulk of what a Wall Street analyst does is to research a company and provide insights as to its business and future...

Gold and its ETF offshoots like GLD are popular with both retail investors and hedge funds like Paulson & Co. However, since gold doesn't throw off any income it cannot be analyzed like a company nor can it be evaluated like an industrial metal like copper because its use as jewelery is only a...

Market makers make their coin on the spread, but most traders employed by mutual funds and hedge funds are not trying to make money from the bid-ask spread, but rather buy low-sell high investing. A WST with access to tens of millions of dollars can afford to be wrong many times in hopes of...

For the self-trader it is tough to make money, yet when they see those who inhabit Wall Street making millions it is tough to reconcile why they are successful and you are not. So, here are some reasons why Wall Street traders (WST) win and the Average Joe trader (AJT) loses (or does not do as...

yeah, the economy still sucks and the Fed confirmed it. (sarcasm)

I know CNBC promotes its Fast Money show as a way to follow the actions of its trading hosts, but I wonder how credible they are when they discuss their positions. It doesn't seem possible for them to have daily opinions on dozens of stocks in the news during the week and to make authentic...

Another benefit of the average up strategy (AUS) is that your break even price is lower than the current price (assuming it initially rises) whereas in an v. average down strategy (ADS) your break even price is higher than the current price. Meaning that in an AUS to arrive at the break even...

A reason why traders blow up is because they average down their trades, when they should instead average up. It is tempting to accumulate more stock when the price falls, but this strategy is wrong because human psychology cannot handle the pain of severe drawdowns. Also, you cannot...

I am discussing the tradeoffs. You have to be aware of them and not assume using spreads get you something for nothing.

One reason to own spreads instead of direct calls or puts is to reduce your cost of option buying. A call option with a month to expiration and average volatility might cost you $2, but a vertical spread might reduce it to $1.00 when you buy a lower priced call ($2) and sell a higher priced...

The reason why most retail investors (RI) fail to beat the market (i.e., the major indexes) is because they actually listen to the advice of financial advisors and market commentators and follow what they say to their investment peril. The most basic advice given to retail investors is they...

I have an open position in SPY formed as a bullish vertical spread with the call bought at 105 and sold at 106 at a cost of $.45. It is currently deep in the money with a maximum upside of $.55. If I think the market will continue to run higher (let's say to 1120) when should you decide to buy...

I use ThinkorSwim (ToS) to do most of my option trading. However, their pricing, similar to other firms, for multi-leg options (esp. butterflies/condors/etc.) kills any profit potential because of the high commissions relative to the amount you risk. For example if you buy one Condor option...

Despite enduring two of the largest asset bubbles within a decade (the tech bubble and housing bubble) we will continue to have more bubbles because of our psychology that almost always believes that rising prices for assets are a good thing (even though we know it is not true). This is because...

I believe professional investors who manage Other People's Money are similar in their mindset and actions as those who paper trade. Both take excessive risks because they know any losses will be shifted onto others or are fictitious. Moreover, since they don't suffer any personal losses, they...

You and I have seen their advertisements: "Just $99/mo. for select picks of hot stocks. Along with my commentary get an exclusive daily trading idea." I have always wondered why investment newsletter services and their web-based brethren need subscriber revenue to make a living. If their...

FYI, I am not a call seller, never have been. I'm just wondering who these folks are and why they are enduring the pain.

There hasn't been much of a pullback for call option sellers to cover. From the Feb 8th low, a call seller has been basically in the red the whole period to the present day.

One has to appreciate the amount of pain that call option sellers have endured during this most recent bullish run. Not only have they been getting killed (unlimited risk), but the premiums they are collecting are pathetic compared w/ a year ago.

I am not talking about risk-free returns, but sites that say that if you had followed my picks on X date you would have earned Y return, and therefore you should follow me because I am such a great stock picker. Contra, the regulatory disclaimer specifically disavows any results, good or bad...