Stock Analysis "Astra International Tbk (ASII)"

Shares of Astra International Tbk (ASII), Pennant Pattern 

Pennant pattern is one of continuation patterns of the most common and reliable in charting. Pennant describes pause for a moment in a very dynamic trend, a trend which is very "steep" because it is formed from a price increase very rapidly and in a relatively short tenpo.
There are two types of Pennant, which is Bullish Pennants when preceded by the uptrend, and Bearish Pennants when preceded by downtrend.

 The form is similar to the Pennant (Panji) consists of two lines to the right growing closer again to form triangles.
Volume should be very large when the form accompanying the Rally Flagpole, then thinned dramatically when the formation Pennants formation took place, the end of this pattern formation process, the volume of which rose abruptly and significantly assist the Breakout. As a standard rule in measuring the intensity of the volume as noted earlier, this confirmation is more important to note Bullish Bearish Pennants of the Pennants. If Breakout is happening on the line above (resistance) Bullish Pennant pattern is not support increasing the volume in question, then this gives a weak signal or less to be trusted.
If the closing price was outside the line as a validation Breakout, the target could be projected into the breakout point to the same distance as "high pole banners / tall flagpole". High flagpole vertical distance measured from the lowest point with the highest point on the previous trend, as shown in the image above.

Chronology of the shares of Astra International Tbk (ASII) as follows:
 

ASII shares in early March 2009 the stock price rose very sharply ASII, strengthening the price until early April 2009, As of the end of April prices fluctuated only form Pennant Patterns (FlagPole) and tends to rest for a moment. Then enter the beginning of May rallynya prices resume and reach the target price on the first 21750-21800, price and drove the price through the first psychology at 25000, it only takes a couple of months back that the psychological price has been penetrated at 28,000.
From the beginning of July 2009 up to early October prices again rose sharply and the highest price over the last year, so the new highest price achieved in this year, from October to December prices rise and fall and is still ongoing to this day, which falls -rising prices are forming Pennant pattern that looks like the image above.

Colleagues for traders who want to buy this stock is still allowed to short-term
only. for example we bought at the price and we sell 33,150 in the 33,700, because prices will be corrected again until eventually the price will breakout at 32,800 (as expected and hopefully the case) is going to happen end of January 2010 month or early February 2010 with the support volume adequate course, actual results of technical analysis projected price will reach 41,350 in the medium term.
Disclaimer! everything that comes with the decision to buy or sell is the responsibility of each individual, investors, and Trader. This analysis is only just learning.

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DUBAI

Ambition fruitful Crisis 

 



If there is blame for the crisis that currently wrapping Dubai, accusations will be directed to the ruler, Sheikh Mohammed bin Rashid al-Maktum. Wah ambition to transform the city into a modern desert like western assist the crisis to match the seed.

Trust themselves and Mohammed's ambition to place Dubai the same place with the London and New York. Artificial island, the buildings sparkling skyscrapers nan, international schools, multinational enterprises, and luxury hotels springing up in Dubai.
All it offers young professionals with a job and Arab lifestyles not be found in Beirut or Cairo. however, do not ask on the foundation of what it was built. Apparently, not oil, but other people's money and their number is many.
"In the past, rulers (Dubai) reliable financial problems because everyone thought oil would support it. From this moment on will be different", said Simon Henderson, an expert on energy and the Gulf of Washington Institute for Near East Policy.
Dubai is one of the seven emirates that make up the United Arab Emirates (UAE). Although the UAE capital, Abu Dhabi, has abundant oil, is not the case with Dubai with little oil.
With the marketing skills, Mohammed managed to lure former politicians, oil tycoons, and executives who are willing to participate in Dubai's real estate sector are fantastic. Professionals from Europe and Asia are willing to pay the villa and condominium development even before the start. Thanks to the guarantee, investors poured billions of dollars to Dubai.
Tradition
Like Dubai's own appearance, Mohammed hold on as the root of the Arab tradition to pursue his ambition to modernity. It seems appropriate mixture with personality and governing style Mohammed. She was screaming camels and horses known to be highly admired. Countless times he spurred his horse in the desert or the Mercedes driving along the smooth highways in Dubai. Mohammed still hear complaints from citizens in the diwan or reseps space, but also regularly update my profile on Facebook and Twitter to communicate with young children Dubai.
Unfortunately, when the debt crisis struck by Dubai World, the government-owned company for 60 billion U.S. dollars, Mohammed and his government refused to intervene. As more and more obvious signs that Dubai becomes a victim of the world economic crisis, Mohammed denied and no recovery plan.
"It would be difficult for Sheikh Mohammed to survive the (crisis) this one," said Christopher Davidson, an expert on the Gulf at Durham University, UK.
Davison said that Mohammed has made investors mistaking that he had a lot of money to support his plan.
Sheikh Mohammed began to retreat from the spotlight, When he appeared recently, he blamed the media exaggerate the problem. He also called the market reaction is due to their lack of understanding about what really happened in Dubai.
Dubai now has no choice to wait a helping hand of Abu Dhabi and hope creditors agree to debt restructuring (REUTERS).

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SHARE ANALYSIS PGAS (Perusahaan Gas Negara Tbk)

INVERTED HEAD & SHOULDER

 

Inverted Head & Shoulder is the antithesis of Head & Shoulder pattern we have just discussed, this pattern also has a high level of reliability. Among the patterns that have a failure rate of only 5 percen and generally formations formed over a period of several weeks served until six months, getting more than six months of increasingly high validation and usually reaches new highs.
PGAS shares above picture shows the beginning of the process of formation of reversal in the pattern formation Inverted Head & Shoulder of a Downtrending charts the start. The peaks (A and C) and valleys (B and D) are low growing gradually started to show signs of losing momentum F is marked by the valley who are unable to achieve the basic level before (D). Valley B is called the left shoulder, Valley D to lower third of the valley called the head, while the valley of  F  is called the right shoulder.

when the bulls begin to dominate, the price will continue to be encouraged to above the neckline. If the price closed at a level above the neckline, then the reversal signal is said to have get validation. Further objectives of the minimum price which is often called the target could determined. The trick is to project "the vertical distance between the neckline D" to the breakout point. (See picture). Stocks break out PGAS since May 2009 end of month stock price continues to rise, and mid April 2009 there continued to rise gap known as "Runaway Gap, then at the end of the month of May 2009 while prices corrected, but in early June the price back up and gap occurs which is called the Break away gap, and to this day still shows stock PGAS bullish trend.
Our vigilance against the bullish trend is slightly disturbed by comparing the price and the MACD, the picture became clear that the price rises, but on the contrary MACD (Down), which means that in the future will be a change in trend for this stock (PGAS). To us who want to enter or buy this stock can still be only for the short term only. When do we buy or go her answers as follows: 3875 Resistance 3525 support, on 3 December 2009 PGAS has penetrated Resistance in 3900, then with tertembusnya resistance is a strong signal to enter or to buy the stock at 3900 prices until 4100 more than the price it more nice dodge. 

Untuk cut loss kita bisa pasang diharga 3500 sampai 3450. Bagi rekan-rekan trader yang ingin menanyakan analysis saham-saham lainnya silahkan kirim e-mail ke alamat ini : cerdaseuy55@yahoo.com atau blogger.trd17@gmail.com , mudah mudahan penulis bisa memberikan masukan atau saran dan informasi lainnya tentang saham.

Happy Trading

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Banking

                                                       

Sign In 30 Bank Supervision

Agency established financial stability of finance ministers of G-20 has made a list of 30 financial institutions and international banks that need special attention.
This is done to prevent the failure of global financial turmoil due to the potential done by banks and financial institutions.
"Financial Stability Board / Board of financial stability (FSB) has included 30 banks and financial institutions as a source of systemic crisis for the global work area that belong to companies that are too big to fail (too big too fail). Behavior shareholders and management policies in in control, "Said the Minister of Finance Sri Mulyani Indrwati in Jakarta.
In the Financial Times reported there are 24 banks and 6 insurance multinational institutions listed in FSB. They are spread in the UK, Europe, the United States, and Japan.
To the Bank was the 24th Bank of America Merrill Lynch (BAC), Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Royal Bank of Canada, Barclays, HSBC,
Royal Bank of Scotland, Standard Chartered, Credit Suisse, and UBS AG. There was also a BNP Paribas, Societe Generale (French), BBVA (Spanish), Santander (Spain), Mitsubishi UFJ, Mizuho, Nomura, and Sumitomo Mitsui (Japan).
Then there's Banca Intesa and UnitCredit (Italy), and Deutsche Bank (Germany), and ING Group (Netherlands). The six groups of insurance business is Aegon, Allianz, Aviva, AXA, Swiss Re, and Zurich.
"The FSB supervision, banks and financial institutions must have a living will (will to live). Because if there are difficulties, they should mentelesaikan own problem before asking for assistance to their respective governments" said Sri Mulyani.

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Options Education

Covered Calls

Concept

We own the stock. We lease someone the right to buy it for more than we paid for it. They'll pay us 8% - 12% per month to do this on certain stocks.

Example: We buy stock for $32, and then sell someone the right to buy it from us for $35, and they pay us $3 for that

You can sell stock you own

• You own the stock and you're ready to sell
• You want to get a little more
• Collect some premium above the current stock price and lock in profits

There are times when an investor is waiting for a pullback in a stock to buy it, but there are also times when one is looking for the stock to increase a few more dollars before selling. If you feel that you are not ready to sell at the current level but would sell if the stock rose a couple of more dollars, then using covered calls to sell stock is a great plan.

In May ABC stock is trading at $67, so let us assume that you bought the stock for a lower price and it is now getting to a price that you would consider selling ($70). You could write the July 70 calls for the current bid of $3.5, collecting $350 in premiums. By writing the calls you are assuming the obligation to sell our stock at $70, which happens to be your target price anyway.

If in July the stock is above $70 you would expect the call to be assigned and you would also keep the premium for which you originally sold the calls; effectively selling the stock for $73.50 per share. It might be easy to second-guess yourself if the stock was up near $80. That is part of investing. But what would have happened if you did not sell the calls? Would you really have sold at $70? How many times have you sold a stock and then watched it rise or held onto a stock you should have sold and watched it fall? Selling a call with the intent to get called out is a great way to get paid to sell a stock you own at a price to which you agree.

Another scenario is for the stock to not rise above $70. The contract will expire worthless, and you keep the premiums collected for selling the contract. Then next month you can turn around and start the whole process over. Let's take a look at that alternative.

You want to use covered calls to generate income.

• Own a strong stock that is currently weak.
• Sell a call as the stock peaks over.
• Repeat the next month.

Writing calls on stock you own to generate income looks like this example. Let's say you own 100 shares of ABC stock, purchased at $38 per share. You notice some possible technical weakness or the stock has been trading sideways for a while and you feel it will likely continue to do so.

You could sell 1 ABC June 40 call at $4. If the stock drops a little, the profit from selling your call will offset your loss on the long stock. If the stock moves to $35 on expiration, you will have lost $3 per share on the stock but made $400 on the expired call. This leaves you with a net profit of $100 even though the stock went down.

By writing calls in this manner, your goal is to pocket the time premium collected from the sale of those contracts, if the options were to expire out of the money. Be aware that you still have the risk of stock being called away if the option is exercised. This will usually take place at expiration when the stock price is above the strike you sold, or in other words, your contracts expire In-the-Money.

If the stock price rises dramatically you will not participate in that rise above the strike that you sold. Depending on your mindset this might not be a bad thing. So your risk in the play is low to moderate.

It's also possible that you have turned very bearish on your stock and its price is dropping faster than you can generate call premiums to offset the loss. In this type of situation you would want to sell your stock. We will deal with this situation specifically in the management section.

This strategy is for stocks you own and are neutral on. If you are extremely bullish on a stock then this strategy is best not used because you may be called away or assigned and you won't participate in the upwards rise of the stock.

Because you are writing or selling contracts, the goal of this play is for the expiration date to come quickly in order that you will soon be out of the obligation to sell your stock. So you want to sell contracts with a short time frame until expiration, preferably less than 30 days.

When you are writing calls with the intent to sell your stock it is OK to write a longer time frame, but not more that two months.

Assignment

When you buy an option you hold the right to exercise the option if and when you choose. By contrast, when you sell an option you assume the obligation of the option if the buyer chooses to exercise. If the option is exercised, you are forced to fulfill the terms of the option. This is known as being assigned.

For example, if you sold 1 XYZ JUN 35 CALL and the option was exercised, you would be assigned and required to sell 100 shares of XYZ to the holder of the call at the $35 strike price, regardless of XYZ's market price. Similarly, if you sold 1 XYZ JUN 45 PUT and it was exercised, you would be required to buy 100 shares of XYZ at $45.

General Sell Guidelines

Sell ATM when slightly bearish

If you are bearish on a stock but are not motivated to sell it outright, you can sell ATM calls to collect a higher premium. If the stock price does rise, you are in effect getting paid to sell your stock, a stock that you were slightly bearish on anyway.

Sell OTM when slightly bullish

If you are slightly bullish, sell the OTM calls by one strike price. This will give you a little cushion if the stock rises. If you do get called out you will be getting paid to sell your stock at a higher price than it is currently trading.

Evaluate the play by using the covered call calculator

This is a very conservative strategy and can be done in a retirement or tax-sheltered account, in fact, it is the only option strategy that you can use in these accounts.

Timing is the key to covered call writing

Trying to write calls for income and not have your stock called away from you takes a bit more skill and timing. It is wise to recognize the bearish or neutral price patterns that you have learned previously to help recognize when a stock is most likely to relax, thus allowing us to keep our premium and our stock, with the anticipation of doing it again next month. It is during the peaks of these patterns that we should look to sell calls. Let's look at a few pattern and talk about ideal times to sell and the possible outcomes.

Sell a short time frame
Any time we see a likely peak in the stock and have anywhere from 30 days to two weeks left until expiration it may be worth our while to consider covered calls.

You must always take into consideration the possibility of the stock dropping so fast that you lose money by holding on to the stock.

And, of course we do have the chance to get exercised or called out. This should not be necessary to mention, and it may seem ridiculous to some, but the number one reason people lose money while using a covered call strategy is that they buy poor stocks at the wrong time. The most ideal time to sell a call is after the underlying stock has gone on a run. It is after a nice healthy run that a stock will most likely relax and consolidate or have a slight pullback. If we do get called out we get the benefits of selling the stock even higher.

Do not buy an individual stock just for the purpose of writing contracts to generate a monthly paycheck. As easy as this strategy seems, people can still lose money. By putting money into a stock with poor fundamentals, you risk the fact that the stock may drop faster than you can generate income from writing and selling contracts.

Think about your objectives with a stock and determine if making a monthly paycheck and cash flow is worth the potential of being called out.

It is not always interesting to make 10% on 500 dollars. It might not even cover your commissions. On the other hand, if you owned 7,000 shares of XYZ even though you are making only 3 or 4 %, you might like the actual dollar amount you can put in your pocket. So it is obvious that every situation is different, but as a general rule achieving about 5% on a covered call play is a pretty good return for tying up your stock for a few weeks.

In conjunction with this, one of the keys to successful covered call writing is the value of the premium you will collect per contract relative to how many shares you own. As a general rule if you can collect about a $1 premium for a one strike price OTM contract, you are going to be very pleased, but as low as .50 to .60 cents can still be worth your while if you own enough shares. Of course, the premiums collected will be relative to the stock price that you own. Higher options premiums are usually associated with more volatile stocks.

If the stock price remains constant as time passes, an option premium will decrease in value. This principal works in your favor if you have already sold contracts, but can work against you if are trying to sell contracts for that monthly paycheck. So what is the ideal time frame? Usually about 25 to 15 days, but there is no rule that says you can't sell contracts with 30 or 35 days remaining until expiration if the opportunity presents itself and you are comfortable with the potential outcome versus your possible gain. Also, there is no rule that says you cannot sell with even less than 2 days left until expiration, provided you can be profitable depending on the outlook of the stock.

You can use this strategy to get paid to sell your stock, particularly if you bought a stock at $43 and it now has gone on a nice run to $50 and you feel comfortable selling at $50 even though there may be a slight possibility of more upside. You can get paid (in the form of collected premiums) to sell at that level by writing the contract. If the stock drops, you now have some extra income to make up for the slight loss in stock value. In other words, you made money anyway. If the stock continues to rise, then you will get called out of the stock at $50. This is not a bad thing since you were thinking about selling at that level anyway, but now you got paid to do so.

This can be a good strategy for Exchange Traded Funds (ETF) investors as well. This strategy can also be combined with the ownership of LEAPS contracts to create what is called a calendar or time spread to generate some great returns.

Warning: The covered call differs from writing an uncovered or naked call in that an uncovered call does not involve the ownership of shares of the underlying stock. Selling uncovered calls is considered highly risky and is not recommended for anyone but the most advanced options investor.

Risk Management

Rapid rise in stock and you do not want to get called out.

Our primary management concern comes up when the underlying stock has run up and we have decided that we do not want to get called out of our stock. If this is the case we need to buy back and close our contract before the expiration date. We will buy back the same type of contract we sold. If we sold a contract on XYZ stock with an expiration date in March and a 50 level strike, then we need to buy back a contract that expires in March with a 50 level strike. This will close our position and we will no longer be obligated to sell our stock.

We will have to pay more for it than we sold it for because now the stock price has risen in value. But we can use the money from the original sale of the contract to help in the purchase. There is a slight chance that we can have early exercise of a contact we have sold. This is when the party to whom we sold the contract exercises his rights before the expiration date. This is very rare, but can happen on occasion.

Rapid decrease in stock and you want to sell your stock.

The second concern is when our stock is dropping rapidly and we want to get out of the stock but we are still under obligation. We cannot sell our stock until our obligation to the contract has expired, even though the contract has now decreased in value and the odds of it being exercised are extremely unlikely. This is a scenario that can occur when you sell a covered call and it is something that you must consider. The stock that you bought may get bad news, the industry may fall out of favor, or the market may get bad news and your stock begins to plummet and you want out.

You must watch out for this, because you cannot just sell your stock if it starts going down, as you are obligated to sell your stock to someone else if they so choose. Now, they will obviously not choose to buy the stock, but the fact remains that you are obligated. You need to buy back (buy to close) the call you sold. For example, if you sold the January $50 call option, you put an order in to buy to close the January $50 call option on XYZ stock. Once this transaction is complete, you can sell your stock because you are out from under the obligation.

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Dubai World

Creditor and Investor Confusion

DUBAI, December 2009 Tuesday
Dubai World drama continues, The stock market in the United Arab Emirates slumped in two consecutive days after the government will not guarantee the debts of Dubai World that amounted to 60 billion U.S. dolloar.
Before, Emirates Central Bank said it would support the banks, both domestic and abroad who have exposure in the Dubai World. Dubai World also changed the way its debt payments.
At the trade center in Dubai's index dropped 6:41 points, while the Abu Dhabi stock exchange fell 5 percent. The two major exchanges in the Gulf region had been down more than 13 percent since reopened on holiday.
Middle east Stock closed on Wednesday until Saturday last week along with the holiday Eid al-Adha. Investors were surprised by the statement of the Minister of Finance that the government never guarantee the debts of Dubai World.
In addition, the Dubai World at midnight local time also issued a new statement of changes in the way of payment of the debts of 26 billion U.S. dollars and restructure subsidiaries have debt.
The influence of delays in payment of debt claims Dubai World not only affect the shares of the financial sector such as banking, but also the real estate sector. Real estate sector in Dubai declined to 9.4 percent on Tuesday last, almost reaching tertinngi reduction, namely 10 percent. Investment sector fell 8.3 percent. Giant developer Emaar shares fell 9.9 percent and Dubai Islamic shares fell 9.8 percent. (AP / REUTERS / JOE).


Dubai World to more worries subside

Jakarta, Wednesday, December 2, 2009
Price index of domestic stocks bounce back significantly.
Eased fears of global financial market participants to the impact of delayed payments on bonds that publish Dubai World to be one driving force, in addition to the announcement of deflation in November 2009.
In the stock trading at the Indonesia Stock Exchange, Tuesday (1 / 12) Composite Stock Price Index closed down 36.66 points or gained 1.51 percent to 2452 levels. LQ45 index rose 8.5 points, or 1.79 percent, to 484 and Kompas 100 Index gained 1.67 points, or 9.8 percent, to 597.
In early trading, the three major stock indexes this JSE had corrected within a thin range. However, the strengthening of regional stock index at the end give a positive sentiment that investors buy back action. The rupiah exchange rate had weakened in morning trading before reversing direction and close higher by 10 points to $ 9465.
Dubai World is known as a property company owned by Dubai's government is currently developing several projects, such as the Burj of Dubai and the Palm Jumeriah, last week, announced the postponement of payment of bonds with maturity of about 56 billion U.S. dollars, or around Rp 532 trillion.

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ANALYSIS SHARE AKRA

AKRA stock graph in the image above has two charts of the first pattern Double Bottom formed since mid-October 2008 until the end of March 2009
and price breakout at the end of May 2009. Over time from May until early September prices continue to move up and thus trend was also up trend. From May to September chart pattern that forms a Ascending Triangle is the second chart pattern where prices once again able to reach the end of the month of September.
Entering the beginning of October 2009 until the end of november 2009 when we observe the chart pattern looks back Ascending triangle formed where the price moves up trying to penetrate the resistance of the first and failed to move prices back down, prices go back again to try to try to break through resistance, but have not touched the resistance is not successful and this is the price of failure back to the bottom. We will wait for this December month, if prices penetrate resistance, here there are two equally strong resistance of the first Resistance is the resistance in 1200 and the second was in 1260. If prices penetrate the first reistance potential price through the second resistance which will likely happen again next bullish breakout and the price will move up higher again.
Summary:
The first Resistance 1200 we buy / enter at 1210 prices
Resistance both 1260 we buy / enter at 1270 prices
Support our 1160 cut-loss / exit a position at 1150-1140 prices
So it means is we will buy this stock when the price was first dilevel Breakout 1210, and we are still able to buy / go back (to which have not been bought in the first price level) that the two dibreakout at 1270 price levels.
Out of the market or cut losses if the price support through 1160, we went out or cut loss at 1150 prices until 1140. 

Disclaimer! decision to buy or sell is the responsibility of each individual, any trader or investor in investing. This analysis which is only a mere learning.
Happy Trading

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Options Education

Selling Options

Now that we have talked a bit about purchasing contacts let's take a look at writing or selling contracts.

Let us take a look back at our building the golf course example.

• We do not own the land.
• We have written a contract.
• We have sold it to someone else and collected a premium.
• We have the obligation side of the contract.
• The property is the underlying asset.
• The person on the other side of the contract, the buyer, chooses to exercise his/her right to own the land.
• To meet our obligation we now have to buy the land, we did not own it before, and deliver it to the exerciser.
• The profit or loss is determined by where the land was trading when we sold the right and where the land is trading when we had to deliver the land to the exerciser. This purchase price will be offset by the premium that we received from selling the original right to buy. 

Selling Calls

Selling naked calls is one of the riskiest strategies of all. The potential loss is unlimited.
The writer of naked calls remains completely exposed to upside risk. Nevertheless, if you are comfortable using this strategy, it is most effective using near term options because they decay more rapidly. And that's what you want. The faster these options become worthless, the better.

Example

Let's look at OEX trading at $401.77. By selling the 400 call for $5.00, you would receive the $500 option premium, your maximum profit. At expiration, if the stock is at or below 400, you keep the full $500. However, your profit disappears as the stock climbs toward $405. Above $405, your loss grows without limit.

Given the mounting losses apparent in the table below, it should be clear that naked call writing is an extremely risky strategy. Even the most bearish investor would do well to convert this position to a bear spread by buying an out-of-the money call. This would limit upside losses.

Selling Puts

Puts as a form of hedging

When we sell a put contract without owning it first we are doing a cash secured or naked put. We will have the obligation side of the contract because we sold someone the right to sell stock to us. We use this strategy to generate income or get paid to buy stock at a lower price than it is currently trading. It is considered higher risk than a covered call and is a more advanced strategy. It is a bull market strategy.

Using this strategy to buy a stock at a discount

The most basic investment strategy is to buy stock. However, there are occasions when the stock may appear attractive, but not at the current price. Have you ever said, "I want to buy this stock, but it is a bit too high for me to feel comfortable. If it pulls back a few dollars, I'd like to purchase it?"
Writing a put option is a great way to deal with this situation. By writing a put option we assume the obligation to buy the underlying security, if the purchaser of the option decides to exercise his right.
There are a few questions we should ask ourselves before proceeding with this strategy. First, is this a stock that we truly want to own? Second, do we have the cash or margin available to do so? Third, are we prepared to take upon us the risk of stock ownership? In other words, if the stock drops dramatically, would we still feel comfortable owning it? Fourth, if the stock is not put to us, are the option premiums collected worth our while?
Some investors are willing to acquire the stock at a discount. This investor likes the stock, but is not willing to purchase at $47.50. He would be willing to purchase the stock at $45 if it pulled back to that level and thinks that this might be likely. He can sell the $45 put contracts for $2, collect the premium and wait for the stock to pull back. If, as anticipated, the stock does pull back he can use the premium collected earlier to help purchase the stock. If the stock does not pull back the option will expire and the premium will be kept.

Selling Puts to Generate Income

Other investors sell puts in order to collect a premium. This person is much like the insurance underwriter. He is not expecting the stock to take a plunge, but is expecting the stock to rise in price or at least retain its current value. Stock XYZ is trading a $47.50 the investor sells a $45 put contract, he collects $2 (premium) per share for doing so. As the stock rises or stays flat the principle of time decay works in the advantage of the option seller. If the stock stays above $45, the option will expire worthless and the put seller will keep the premium collected. If the stock were to fall below $45, then he would have the obligation to purchase the stock at $45 even though the stock may be trading lower.
Three scenarios when one might sell a put.

1. If XYZ is trading at $43 and you expect it to rise, you could sell 1 XYZ JUN 40 PUT for $4. As long as XYZ traded at or above the $40 strike price, the put would not be exercised and you would keep the premium.
   
2. XYZ drops below $40, the put would be In-the-Money and would be exercised. As the option seller you would be assigned, forcing you to purchase 100 shares of XYZ at $40, or $4,000.
   
3. The risk scenario is where XYZ is trading at $30 when the option expires. The option would be exercised, and you would lose $6 per share. The $30 market value of the stock, minus the $40 strike price, plus the $4 you received for selling the put.
   

Did you notice the numbers in each example are exactly the same, even the outcomes are similar, but the mindset can be a bit different? The danger is that the underlying stock drops dramatically and you are now obligated to purchase the stock at extremely much higher price than it is currently trading.
Put selling is designed to complement a stock-trading portfolio because it offers two methods for generating profits: collecting premium by selling an Out-of-the-Money option and/or acquiring a stock at a reduced price.
This is an advanced strategy due to the potential large cash outlay an investor might have if a put he sold was exercised. There will be a margin requirement when selling puts. It is advised that you check with your broker for the requirements needed to implement this strategy.
Put selling takes advantage of the concept of time decay because the premium an option sells for declines as the option approaches expiration. This allows the options trader to profit without having to pick a perfect entry as in the case of trading stock or call options. Time will decay most rapidly the closer the option gets to its expiration.
Put selling is similar to the activity of an insurance company. Insurance companies collect premiums for accepting the contract to cover the risks of those they insure. You act like the insurance underwriter when you sell or short puts. As an underwriter, you would insure a person's car, home or businesses equipment in return for collecting the premium. If no claim is made against loss, then you keep the premium.
This is the crux of put writing or selling. In exchange for being paid a premium, you accept the downside risk of the underlying security. Insurance companies make billions of dollars annually because they know that you probably won't be crashing your car and they've spread their obligation over many different people. You can also be handsomely paid taking on those obligations in the stock market, provided that you take the necessary steps to limit your risk.
There is an argument as to whether this is a conservative strategy or speculation. The investor who is willing to purchase the underlying security and has the means to do so is not speculating. This investor has the capital necessary to purchase the stock and even though the assignment of the stock may not be what he planned, having the stock put to him is not necessarily a bad thing either.
Put selling becomes speculative when one sells puts and does not have the financial means to purchase the stock outright. He can do this because there is only an initial margin requirement for each short put (for margin purposes, a short put is considered uncovered regardless of the amount of capitol supporting the activity). This investor has the possibility of a bigger loss than he might be prepared to accept. This could be considered as speculation.

Some Things to Think About

There are two rules you must never ignore when selling puts:

• You should be bullish on the stock market in general.

• Only play fundamentally strong stocks that you are willing to purchase outright.

The greatest mistake a put seller can make is to sell puts on a stock that he or she is not willing to buy if the option is exercised.
You will need to meet the margin requirement in order to participate in put selling. It is advised that you contact your broker in order to determine the specific margin requirements.
Since you are selling a contract you want to get to expiration fairly rapidly and have time decay helping along. So, just like covered calls, you want to sell a short time frame, usually less than 30 days.

Let's review the guidelines one more time:

• Bullish on the general markets
• Fundamentally great stock
• Willing to buy it outright at the strike you sell
• Fulfill margin requirements
• Sell a short time frame

Let's look at some charts to discuss possible entries into this type of play. Sell the puts when the stock is in potentially low ranges of a bullish chart pattern.

The exit of this play depends on your mindset. You will either keep the premium or use it to purchase the stock at a lower price than it is currently trading. Your biggest concern with put selling is if the stock drops much more than anticipated. One of the dangers is that you are utilizing this strategy at the top of a raging bull market, the bubble pops and you in a sense actually catch the falling knife. Let's take a few moments to talk about how to manage this situation.

Risk Management

If the underlying security suddenly drops on bad news and you are concerned about it dropping further, you will need to purchase back an option with the same strike price and expiration that you sold. You will be taking a loss by doing this because if the stock has dropped, the put option has now increased in value. You can use the premium originally collected to help purchase back the option. It is not uncommon for the option to be exercised early in this scenario so you must act swiftly in order to cover yourself in case of this scenario.
One way to cut your risk is to do this on an Exchange Traded Fund (ETF), rather than expose yourself to the risk on an individual underlying security. If you have the ETF put to you, you will own a diversified investment and you can write covered calls on it.

A Form of Hedging

When we write and sell a CALL, we are using a form of hedging, it can be considered less risky and can offer some downside protection. We use this strategy to sell stock at a price we agree to or to generate income. We must own the underlying stock. If we do not, we will be uncovered or naked and exposed to high risk. This is not recommended for beginners.
When you are first starting out as an investor, your primary use of options should be as a form of hedging. The first strategy that you will most likely participate in will be covered call writing. Selling contracts allows for us to explore many alternatives to just buying stock and hopefully selling it at a higher price.
In contrast to taking on directional risk (buying puts and calls) where our entries and money management guidelines need to be very disciplined and clearly defined, hedging allows you to have some wiggle room as you gain experience in the markets.



 

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SHARE ANALYSIS ADRO

In the picture above to form two ADRO stock chart pattern within a chart of the first tahun.Pattern known as Saucer (Rounding Bottom) and the second chart pattern known as the Ascending Triangle. if you look at the picture ADARO Shares (ADRO) was formed chart pattern Ascending Triangle again where there clearly visible in the picture there is strong resistance at 1770, where prices had corrected and are still trying to penetrate the strong resistant. the question is when do we go or buy this stock and what price we buy or go? the answer is we will have purchased or signed when the price has been penetrating resistance in 1770. So in 1780 the price that we had to go or this ADRO shares.
To us cut losses or exit a position when the price has been able to penetrate the support in 1660. So it means we go out or cut loss at 1650 prices.
Summary:
Resistance 1770 we bought at 1780 prices and (buy)
Support position in 1660 we put out in 1650 (cut loss)

What is saucer (Rounding Bottom) is a reversal pattern can occasionally occur in the form of a plate (saucer) or a rounding bottom. gradually formed, from the original trend down, then sideways, and finally rising. This pattern is often preceded by a correction occurs before breakout resistance and bullish market.

Ascending Triangle is a pattern that we discussed in UNTR shares in the previous postings, but we re a little more about the ascending triangle pattern is, so the minimum Triangle pattern there are four turning points (reversal point), but often six turning points (reversal point ).
 

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Options Education

Buying Calls

If you think a stock is going to go up in price, you can buy calls. In general we buy a stock or a call option because we think it is going up in value; and, when it does, we sell the stock or option.

Imagine it is May and XYZ is trading at $33 when you decide to buy 1 XYZ JUN 30 CALL for $4. If XYZ went up, so would your option. For example, if XYZ increased from $33 to $38, your call would also increase from $4 to perhaps $9. In both cases the asset has increased by $5, but that is an increase of 125% in the option and only 15% in the stock.

Conversely, if XYZ went below $30, the option would be Out-of-the-Money and its value would decline toward zero as it neared expiration, costing you 100% of your investment.

When you see a bullish setup, the choice to buy call options just adds leverage. You have to make the choice.

• Buy 100 shares of stock @ $32 for $3,200 or buy one (1) contract of call options @ $3 for $300.
• If the stock goes up $2, the profit on the stock is 6% ($200/$3,200) or the profit on the call option is 30% ($100/$300).
• If the stock goes above the strike price, you can exercise the option (buy @$32 and sell @$37) or sell the option. However, if you exercise the option, you lose the option premium.
• If the stock is going down, you can buy the put option @ $3.

Buying Puts

If you are bearish on a stock, you might want to buy puts.
To illustrate put buying, imagine it is May and XYZ is trading at $33 when you buy 1 XYZ Jun 35 put for $3. As the price of XYZ declines, your put becomes more valuable. For example, if XYZ dropped from $33 to $30, your put would increase from $3 to around $6. In this case a 10% drop in the stock could cause a 100% increase in your put.
Conversely, if XYZ rallied and then stayed above the $35 strike price, your put would be Out-of-the-Money and decline in value as it neared expiration. Of course XYZ might also fluctuate wildly before expiration, giving you various opportunities to sell or exercise your put.

Puts As Insurance

Another important use for put options is insurance on stocks that you own. If you own a stock and you have a forecast that the stock may fall, you can purchase a put option to help as protection against the decline. If the stock does fall, then the option goes up in value and offsets the declining value of your stock.
This strategy is similar to someone that purchases fire insurance on his or her house. If the house burns down, then they get money to build another house. If it doesn't burn down, then they've paid for insurance that they didn't use. If you buy a put option on a stock and it doesn't fall, then you've essentially paid for insurance that you don't use.
Typically you would only use puts on a fundamentally sound stock that is still showing overall technical strength, but may have a short-term pull back. You could also buy some puts on a stock that has an impending announcement that is extremely uncertain, and you don't want to be left without protection, but you'd like to keep the stock in case the news is good. A company that is awaiting FDA approval on a new drug would be a good example of such a situation.
You are using put options as a form of insurance against downturns in the price of a stock, without losing the upside potential of stock ownership. Let's say that you own 100 shares of XYZ, purchased at $60 a share, a $6000 investment. XYZ has increased to $81 you have an unrealized gain of $2100; but you now have short-term concerns such as an earnings announcement or bearish sentiment in the markets.
You don't want to sell your stock and take the short-term capital gains and you think in the long term the stock will continue to rise. By purchasing 1 XYZ JUN 80 PUT for $4, you acquire the right to sell 100 shares of XYZ, the same number of shares that you own, for $80 anytime before expiration while keeping your stock. Here is the formula for how much protection you have bought.
Strike price of put $80; Stock purchase price $60; Premium $4; Protected profit $16 per share. You have protected $1600 of your $2100 gain!
If the stock moves up you will lose the $400 it cost you to buy the insurance, but you will have the gain in the stock to off-set the cost of the, in this case, insurance premium.
It the stock moves down, let's say to $50 for our example, you would still be able to sell your stock for 80 per share minus the 400 it cost for the put.

Let's do the math to see how it works.

Bought at	-$60
Sold at	+$80
Cost of put	-$4
Profit	$16 per share

You still would have made a profit of $16 per share on a stock that is down $10 from where you bought it.

Buying Options Summary

The purchase of options is typically a more aggressive strategy that many investors may never undertake. However, it can be quite exciting and financially rewarding if you are able to master the rules and strategies that have been presented.

The Guidelines of Buying Options

• Buy 2 to 4 months
• Buy In-the-Money
• Buy At-the-Money
• Look for options with tighter spreads
• Open interest above 50
• Make sure you are using precise money management guidelines and stops
• Pick an exit
• Use trailing stops if you don't want to exit the trade
• Otherwise 10%
• 50% safety net for unexpected disasters (Volatile Stocks)
• Move at least $1.00 either direction a day

An investor should proceed with caution when venturing into any new strategy and always practice and paper trade to prepare for the real markets and the real risks that exist when trading options. We do not recommend or encourage any particular strategy or course of action to any investor. We merely wish to expand your investing horizons and increase the choices you have as an investor.



 

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