General Options

Expert options trader Phil Davis shares his options trading secrets and views on today’s economy. John Nyaradi: Philip R. Davis is an options trading expert and founder of Phil’s Stock World, a stock and options trading site that teaches the art of options trading to newcomers and advanced trading strategies for expert traders. His articles and references have appeared in the Wall Street Journal, Google Finance, Business Week, CNN Money.com, Trader Planet, and iStockAnalyst. Phil is also a marketing partner of Wall Street Sector Selector, and at the end of this interview, I’ll tell you about how you can advantage of a special offer from Phil’s Stock World. Phil, welcome to Wall Street Sector Selector. Philip R. Davis: Hi, thanks, John. John Nyaradi: Today, we’re going to talk a little about your view of the economy, the current state of the markets, then dive into some of the specifics of your option trading strategies and Phil’s Stock World itself. Let’s start with your big picture...

Option trading services is one of the most misunderstood trading procedures in the world today. It is really important that the people, particularly the ones who are interested in investing in the stock markets should be made aware of the real meaning of option trading. In the opinion of many traders, option trading is nothing more than a substitute of stock that has a higher leverage and less required capital. But the truth is very much different. The options have a very different tenor than the stocks. There are mainly two types of stock options that are: a) The call option- When you buy a call option you have all the rights in the world to purchase a stock at the strike price any time before the expiration. Remember you have the right and are not under any obligation to do so. b) The put option- The purchase of the put option gives you the freedom to sell a stock anytime at the...

By Angela Moon NEW YORK (Reuters) - Options investors scrambled to rebuild bullish trades on Cisco Systems Inc CSCO.O a day after botching their bets on the post-earnings move in the shares for a second straight quarter. Coming into the report, the options market was looking for modest volatility. But traders were blindsided when the tech bellwether's dismal outlook sent its shares plunging 16.2 percent, the worst one-day loss in 16 years. Investors were bullish on Cisco because the tech sector has been a top performer during earnings reporting periods. They believed CEO John Chambers would be more optimistic about tech sector spending, not expecting a repeat of three months ago, when Cisco shares slumped 10 percent after lackluster earnings. "Cisco is saying that this is a one-quarter thing, but who knows? Options traders are definitely going to be a lot more cautious from now on, probably all the way through next earnings," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in...