Forex Books Talking

that comprise the S&P 500 Index have spent hundreds of billions in stock buybacks over the past 6 years. With fears over the commencement of a market correction

management teams may elect to soon put the brakes on their buyback plans. If that were to occur, investors would surely recognize that liquidity, volume,

and prices would drop, further exacerbating a stock market decline and potentially protracting a downturn. Another byproduct of a stock market

buyback suspension is its impact on financial reporting. When a company buys back its shares in the open market that stock is returned to its treasury and the number

of shares outstanding is reduced by that number. So, when a company reports financials that demonstrate a decline in shares outstanding from the year-ago period, EPS

could be raised not by operating performance but simple math. Fewer shares in the share count results in a higher earnings per share. Once a buyback plan is suspended

that incremental EPS gain is lost, making it harder to outperform EPS recorded in prior periods. Most small cap investors and traders do not think of options when buying

or selling stocks in the small cap space and there is generally lot of fear inappropriately associated with the word ‘options’. The fact is that option strategies can be used in a simple way to generate

income for short-term – intermediate-term holdings which can add to returns. How? Use covered calls. It is not as difficult as it sounds.For those not familiar or those needing a review here is what is involved simplest terms

Buy 100 shares of stock XYZSell 1 Call Contract of stock XYZ (1 contract = 100 shares of underlying security)the transaction, the investor will own the stock and generate the incom

income of the trade price of the option contract. One crucial element to remember is that 1 contract equals 100 shares of the underlying stock. So, the investor needs

buy 200 shares for 2 contracts, 300 for 3 contracts, etc. to cover the total number of call contracts. A sound tactic is to sell ‘out of the money’ calls at a strike price equivalent to what yo

are willing to take profits and sell the underlying security. This mechanism is automatically in place, as the buyer of the call coul are willing to take profits and sell the underlying security. This mechanism is automatically in place, as the buyer of the call could ‘exercise’ or buy thd ‘exercise’ or buy th

As a result, the worst-case scenario is that you sell the stock at your low-end taock from the contract if it moves above the strike, which is in essence your target price.

As a result, the worst-case scenario is that you sell the stock at your low-end target price arget price a

and the best-case scenario is that you generate income from the call option sale, enhancing your return on investment.We recommend incorporating the following criteria when using a covered call strategy.