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I wish there was something like this in the days of 2007-2008 when it was obvious the oil price will go up. I remember making good money on the bets that time when oil price went above $150. But boy, it took us tremendous amount of time and research figuring out how to invest in Oil. We could come up with a few companies which would benefit from high oil prices and then invested in a handful, still made a decent amount of money. We invested in 6 different stocks and paid over $100 in commission. Oil is an example, there are many common sense themes which would make sense investing in from time to time. Now, investing in Oil or any big ideas is made simple with Motif Investing.

This new start-up allows people to buy "motifs" which is a collection of up to 30 stocks that fit with an investment theme, like Oil, cloud computing, rental market or companies that benefit during an economic downturn. Motif does the hard work of picking and weighting the stocks that go into each basket of assets. Each of more than 50 motifs costs just $ 9.95, nearly the same price as conducting a single stock transaction at major online brokers. Not only this, user can fully customize the stocks and weighting of any motif to suit their preference and need. There are easy to use charts and graphs that let users compare how a particular Motif has performed over the time against any benchmarks.

This is a new era to the age of investing. Investing ideas come from your daily lives and what you see, this takes it to the next level. Motif gives the platform and tool to individual investor, the way many successful wealth managers operate. It also allows you to connect with Facebook and you can decide what to share with whom to share etc. and brings the social aspect in complimentary way. Motif Investing also has the backing of many former big shots of silicon valley and good line of investors.

Let's look at some of the Motifs they currently have. Excited about the idea of innovation in how we pay in the age of smart phone literally running our lives, there is Digital Dollars Motif. Worried that the Euro crisis will sink your portfolio? Check out 20 companies with all sales coming from within the US. You believe people would pay more attention to what and how they eat, there is Healthy and Tasty motif. Oh well, on the other side, there is a Junk Foods motif as well. There are political motifs as well for Democratic and Republican Donors. If you think women run business much better, you can invest in Women CEOs and buy 20 stocks of companies led by women. . You can also invest in popular Dogs of the Dow strategy with Motif. If you want steady income, Check out the new fixed-income motifs: customizable portfolios of up to 30 bond ETFs. Last but not the least, you can submit your ideas about Motif to them as well.

We believe that this is just the beginning of a new chapter in investment world with Motif Investing. This innovative platform is a boon to individual investor. They say that an Idea can change your life, this new way of investing in ideas would definitely change investing for good.


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Take the 2% per week challenge, Trade with us. We only have very few openings for new subscribers and currently offering two weeks of free trial and then special price of $99.95 per month. Sign up for our Trade Alerts and make 2% or more Every Week! Now offering Auto Trading with EOption.

If you are looking for a get rich quick scheme or some service promising 80-100% per trade, please go look somewhere else. Our trades are very conservative with weekly earnings of 1%-5%. We have been trading using this strategy successfully for over 4 years. We started the Beta Testing with a small group of people in October 2011.

With years of experience and extensive research we have developed a system for making consistent profit every week giving us moderate return with low risk. Safety is our No. 1 priority, we don't make any trades if we don't feel they are in safe zone. Our proprietary in-house system provides clear indication of winning trades every week. Regardless of Bull or Bear market, we consistently make 2% and sometimes more every week using our strategy on Options. If you are not familiar with Options, please read Options 101 - How Do Options Work? .

More than 70% of all Options expire worthless, that is the fact. We use this for our benefit to trade Credit Spreads. This involves selling and buying options at different strike price (difference in strike price is called spread) for a net credit. We place such trades when our system indicates very high probability of them expiring worthless allowing us to keep the premium. Read about Bull Put Spread and Bear Call Spread if you are not familiar with Credit Spread Options Strategies.

We have made our Trade Alert Service available to a few new subscribers. We will need to talk to you after you sign-up to understand our compatibility on trading together before we can approve you. This is a limited time opportunity for you to sign up and receive free two weeks trial of our trade alert newsletter. The idea is for you to make enough money during the trial period to be able to pay the monthly trade alerts fee for several months. We are going to accept only a few members. This is serious stuff, we have members making money consistently every week and a few of them are using the strategy with their IRA account as well. We have registered our Newsletter with EOption and are now offering Auto Trading to our members. This will be a great opportunity for folks which can't be in front of computer during trading hours to place the trades. Auto Trading service is a boon for the folks who are constantly travelling or  folks who work in the offices where Trading is not allowed using work computers.

Since October 2011, Our trades only lost money twice (-5.5% and -18.5%). That puts our success rate at 98%. There were two instances during this period where broker closed our position on Friday with $0.01 cutting down our profit by 1%. Once we closed the position  ourselves on Friday for $0.01 cutting down our profit by 1%. Making small but consistent profit is our goal.

In order for you to be eligible to receive and get the best out of our trading alerts, you need to have the following:

  1. Have the basic knowledge of trading Options, understand how they work and the risk associated with that.
  2. Be prepared to trade with $10,000 (at least $5,000). Our current members group has average investment capital of just above $21,000.
  3. Before you place trades using our trade alerts, you will need to have brokerage account with one of the low cost options trading brokers. Since our trades are very conservative with high number of Options contracts, low brokerage fees are necessary for you to generate maximum profit. We recommend EOption. You can take advantage of their wire transfer fee reimbursement offer, for transfer of $10,000 or more they will refund up to $30 in wire transfer fee charged by your bank. We offer Auto Trading Service to our members through EOption. The other option for brokerage account is OptionsHouse. You can take advantage of one of the following offers they have when you open the account. a) Get 100 Commission-Free Trades at OptionsHouse.com! (Requires minimum $5,000 opening balance, our favorite). b) Get a free Kindle Fire from OptionsHouse. (Requires minimum $10,000 opening balance). c) Get a Free Dell Monitor When You Open and Fund an Account at OptionsHouse. (Requires minimum $10,000 opening balance). EOption is cheaper, you don't pay for the bells and whistles you don't use and need. Setting up the ACH with EOption is little tedious and lengthy process (mailing a paper form), that's why some members prefer OptionsHouse. If you are outside USA, EOption is the only option available to you. We have accounts with both OptionsHouse and EOption.

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Track Record - Trade Alert for Past Weeks

Week Ending 6/14/2013 - 1%

Placed on 6/10/2013
Bull Put Spread SPY Exp: 6/14/2013
Buy Put $158, Sell Put $159, Limit Order with Credit $0.02 (2%)

Week Ending 6/7/2013 - 1%

Placed on 6/6/2013
Bull Put Spread SPY Exp: 6/7/2013
Buy Put $156, Sell Put $157, Limit Order with Credit $0.01 (1%)

Week Ending 5/31/2013 - 2%

Placed on 5/28/2013
Bull Put Spread SPY Exp: 5/31/2013
Buy Put $160, Sell Put $161, Limit Order with Credit $0.02 (2%)

Week Ending 5/24/2013 - 2%

Placed on 5/20/2013
Bull Put Spread SPY Exp: 5/24/2013
Buy Put $161, Sell Put $162, Limit Order with Credit $0.02 (2%)

Week Ending 5/18/2013 - 2%

Placed on 5/15/2013
Bull Put Spread SPY Exp: 5/18/2013
Buy Put $160, Sell Put $161, Limit Order with Credit $0.02 (2%)

Week Ending 5/10/2013 - 2%

Placed on 5/9/2013
Bull Put Spread SPY Exp: 5/10/2013
Buy Put $159.5, Sell Put $160.5, Limit Order with Credit $0.02 (2%)

Week Ending 5/3/2013 - 2%

Placed on 4/29/2013
Bull Put Spread SPY Exp: 5/3/2013
Buy Put $153, Sell Put $154, Limit Order with Credit $0.02 (2%)

Week Ending 4/26/2013 - 1%

Placed on 4/25/2013
Bull Put Spread SPY Exp: 4/26/2013
Buy Put $155.5, Sell Put $156.5, Limit Order with Credit $0.01 (1%)

Week Ending 4/20/2013 - 2%

Placed on 4/15/2013
Bull Put Spread SPY Exp: 4/20/2013
Buy Put $150, Sell Put $151, Limit Order with Credit $0.02 (2%)

Week Ending 4/12/2013 - 2%

Placed on 4/10/2013
Bear Call Spread SPY Exp: 4/12/2013
Buy Call $162, Sell Call $161, Limit Order with Credit $0.02 (2%)

Week Ending 4/5/2013 - 2%

Placed on 4/1/2013
Bull Put Spread SPY Exp: 4/5/2013
Buy Put $150, Sell Put $151, Limit Order with Credit $0.02 (2%)

Week Ending 3/28/2013 - 2%

Placed on 3/25/2013
Bull Put Spread SPY Exp: 3/28/2013
Buy Put $148, Sell Put $149, Limit Order with Credit $0.02 (2%)

Week Ending 3/22/2013 - 2%

Placed on 3/20/2013
Bull Put Spread SPY Exp: 3/22/2013
Buy Put $151, Sell Put $152, Limit Order with Credit $0.02 (2%)

Week Ending 3/16/2013 - 2%

Placed on 3/12/2013
Bull Put Spread SPY Exp: 3/16/2013
Buy Put $150.5, Sell Put $151.5, Limit Order with Credit $0.02 (2%)

Week Ending 3/8/2013 - 1.07%

Placed on 3/6/2013
Bull Put Spread SPY Exp: 3/8/2013
Buy Put $150.5, Sell Put $151.5, Limit Order with Credit $0.01 (1.07%)

Week Ending 2/22/2013 - (-18.5%)

Placed on 2/20/2013
Bull Put Spread SPY Exp: 2/22/2013
Buy Put $148.5, Sell Put $149.5, Limit Order with Credit $0.02 (2%) Closed the Trade on 2/21 with 18.5% Loss

Week Ending 2/16/2013 - 2%

Placed on 2/13/2013
Bull Put Spread SPY Exp: 2/16/2013
Buy Put $148.5, Sell Put $149.5, Limit Order with Credit $0.02 (2%)

Week Ending 2/8/2013 - 2%

Placed on 2/4/2013
Bull Put Spread SPY Exp: 2/8/2013
Sell Put $146, Buy Put $145, Limit Order with Credit $0.02 (2%)

Week Ending 2/1/2013 - 2%

Placed on 1/28/2013
Bull Put Spread SPY Exp: 2/1/2013
Sell Put $146, Buy Put $145, Limit Order with Credit $0.02 (2%)

Placed on 1/29/2013 (For new subscribers joining on 1/29)
Bull Put Spread SPY Exp: 2/1/2013
Sell Put $147, Buy Put $146, Limit Order with Credit $0.03 (3%)

Week Ending 1/25/2013 - 2%

Placed on 1/22/2013
Bull Put Spread SPY Exp: 1/25/2013
Sell Put $145, Buy Put $144, Limit Order with Credit $0.02 (2%)

Week Ending 1/19/2013 - 2%

Placed on 1/15/2013
Bull Put Spread SPY Exp: 1/19/2013
Sell Put $143, Buy Put $142, Limit Order with Credit $0.02 (2%)

Week Ending 1/11/2013 - 2%

Placed on 1/8/2013
Bull Put Spread SPY Exp: 1/11/2013
Sell Put $142, Buy Put $141, Limit Order with Credit $0.02 (2%)

Week Ending 1/4/2013 - 2%

Placed on 1/2/2013
Bull Put Spread SPY Exp: 1/4/2013
Sell Put $142, Buy Put $141, Limit Order with Credit $0.02 (2%)

Week Ending 12/28/2012 - 2%

Placed on 12/24/2012
Bull Put Spread SPY Exp: 12/28/2012
Sell Put $137, Buy Put $136, Limit Order with Credit $0.02 (2%)

Week Ending 12/22/2012 - 2%

Placed on 12/18/2012
Bull Put Spread SPY Exp: 12/22/2012
Sell Put $138, Buy Put $137, Limit Order with Credit $0.02 (2%)

Week Ending 12/14/2012 - 2%

Placed on 12/11/2012
Bull Put Spread SPY Exp: 12/14/2012
Sell Put $138.5, Buy Put $137.5, Limit Order with Credit $0.02 (2%)

Week Ending 12/07/2012 - 3%

Placed on 12/04/2012
Bear Call Spread SPY Exp: 12/07/2012
Sell Call $144, Buy Call $145, Limit Order with Credit $0.03 (3%)

Week Ending 11/30/2012 - 2.5%

Placed on 11/26/2012

Bull Put Spread SPY Exp: 11/30/2012
Sell Put $136, Buy Put $135, Limit Order with Credit $0.02 (2%)

Placed on 11/27/2012
Bull Put Spread SPY Exp: 11/30/2012
Sell Put $137.5, Buy Put $136.5, Limit Order with Credit $0.03 (3%)

Week Ending 11/17/2012 - 2%

Placed on 11/14/2012
Bear Call Spread SPY Exp: 11/17/2012
Sell Call $141, Buy Call $142, Limit Order with Credit $0.02 (2%)

Placed on 11/16/2012
Bull Put Spread SPY Exp: 11/17/2012
Sell Put $133, Buy Put $132, Limit Order with Credit $0.02 (2%)

Week Ending 11/9/2012 - 2%

Placed on 11/7/2012
Bull Put Spread SPY Exp: 11/9/2012
Sell Put $136, Buy Put $135, Limit Order with Credit $0.02 (2%)

Week Ending 11/2/2012 - 2%

Placed on 10/31/2012
Bull Put Spread SPY Exp: 11/2/2012
Sell Put $137.5, Buy Put $137, Limit Order with Credit $0.01 (2%)

Placed on 11/1/2012
Bull Put Spread SPY Exp: 11/2/2012
Sell Put $139.5, Buy Put $139, Limit Order with Credit $0.01 (2%)

Week Ending 10/26/2012 - Break

We were on vacation with Beta Tester group celebrating our success.

Week Ending 10/20/2012 - 2%

Placed on 10/15/2012
Bull Put Spread SPY Exp: 10/20/2012
Sell Put $138, Buy Put $137, Limit Order with Credit $0.02 (2%)

Week Ending 10/12/2012 - 5%

Placed on 10/08/2012
Bear Call Spread SPY Exp: 10/12/2012
Sell Call $148, Buy Call $149, Limit Order with Credit $0.05 (5%)

Week Ending 10/05/2012 - 3%

Placed on 10/02/2012
Bear Call Spread SPY Exp: 10/05/2012
Sell Call $147, Buy Call $147.5, Limit Order with Credit $0.02 (4%)

Placed on 10/01/2012
Bull Put Spread SPY Exp: 10/05/2012
Sell Put $139.5, Buy Put $139, Limit Order with Credit $0.01 (2%)

Week Ending 09/28/2012 - 3%

Placed on 09/24/2012
Bear Call Spread SPY Exp: 09/28/2012
Sell Call $148, Buy Call $148.5, Limit Order with Credit $0.02 (4%)

Place on 09/25/2012
Bull Put Spread SPY Exp: 09/28/2012
Sell Put $142, Buy Put $141.5, Limit Order with Credit $0.01 (2%)

Week Ending 09/22/2012 - 5%

Placed on 09/17/2012
Bull Put Spread SPY Exp: 09/22/2012
Sell Put $142.5, Buy Put $142, Limit Order with Credit $0.02 (4%)
50% Filled

Placed on 09/18/2012
For Folks who didn't get the trade filled at all on 09/17/2012
Bull Put Spread SPY Exp: 09/22/2012
Sell Put $143, Buy Put $142.5, Limit Order with Credit $0.02 (4%)

For Folks who got the trade filled partially on 09/18/2012
Bull Put Spread SPY Exp: 09/22/2012
Sell Put $143.5, Buy Put $143, Limit Order with Credit $0.03 (6%)
50% Filled

Week Ending 09/14/2012 - 3%

Placed on 09/10/2012
Bull Put Spread SPY Exp: 09/14/2012
Sell Put $139, Buy Put $138, Limit Order with Credit $0.03 (3%)
100% Filled

Week Ending 09/07/2012 - 3%

Placed on 09/04/2012
Bull Put Spread SPY Exp: 09/07/2012
Sell Put $136, Buy Put $135, Limit Order with Credit $0.03 (3%)
100% Filled

Week Ending 08/31/2012 - 3%

Placed on 08/28/2012
Bull Put Spread SPY Exp: 08/31/2012
Sell Put $138, Buy Put $137, Limit Order with Credit $0.03 (3%)
100% Filled

Week Ending 08/24/2012 - 2%

Placed on 08/23/2012
Bull Put Spread SPY Exp: 08/24/2012
Sell Put $139, Buy Put $138, Limit Order with Credit $0.02 (2%)
100% Filled

Week Ending 08/18/2012 - 5%
Placed on 08/13/2012
Bear Call Spread SPY Exp: 08/18/2012
Sell Call $143, Buy Call $144, Limit Order with Credit $0.05 (5%)
100% Filled

Week Ending 08/10/2012 - 2%
Placed on 08/10/2012
Bear Call Spread SPY Exp: 08/10/2012
Sell Call $141, Buy Call $142, Limit Order with Credit $0.02 (2%)
100% Filled

Week Ending 08/03/2012 - 4%
Placed on 08/02/2012
Bear Call Spread IWM Exp: 08/03/2012
Sell Call $79, Buy Call $80, Limit Order with Credit $0.04 (4%)
100% Filled

Week Ending 07/27/2012 - 5% Average
Placed on 07/26/2012
Bull Put Spread IWM Exp: 07/27/2012
Sell Put $76, Buy Put $75, Limit Order with Credit $0.04 (4%)
50% Filled

Placed on 07/24/2012
Bear Call Spread VXX Exp: 07/27/2012
Sell Call $16, Buy Call $17, Limit Order with Credit $0.06 (6%)
50% Filled

Week Ending 07/21/2012 - 3%
Placed on 07/17/2012
Bear Call Spread IWM Exp: 07/21/2012
Sell Call $82, Buy Call $83, Limit Order with Credit $0.03 (3%)
100% Filled

Week Ending 07/13/2012 - 3%
Placed on 07/10/2012
Bull Put Spread IWM Exp: 07/13/2012
Sell Put $77, Buy Put $76, Limit Order with Credit $0.03 (3%)
100% Filled

Week Ending 07/06/2012 - 4% Average
Placed on 07/03/2012
Bull Put Spread VXX Exp: 07/06/2012
Sell Put $13, Buy Put $12, Limit Order with Credit $0.06 (6%)
50% Filled

Placed on 07/05/2012
Bull Put Spread SPY Exp: 07/06/2012
Sell Put $134, Buy Put $133, Limit Order with Credit $0.02 (2%)
50% Filled

Week Ending 06/29/2012 - 2%
Placed on 06/26/2012
Bull Put Spread SPY Exp: 06/29/2012
Sell Put $127, Buy Put $126, Limit Order with Credit $0.02 (2%)
100% Filled

Week Ending 06/22/2012 - 2%
Placed on 06/21/2012
Bull Put Spread SPY Exp: 06/22/2012
Sell Put $131, Buy Put $130, Limit Order with Credit $0.02 (2%)
50% Filled

Placed on 06/20/2012
Bull Put Spread IWM Exp: 06/22/2012
Sell Put $75, Buy Put $74, Limit Order with Credit $0.02 (2%)
50% Filled

Week Ending 06/16/2012 - 2.5% Average
Placed on 06/14/2012
Bear Call Spread IWM Exp: 06/16/2012
Sell Call $78, Buy Call $79, Limit Order with Credit $0.03 (Net 2%)
50% Filled
Closed By Broker on 06/15/2012 with $0.01 Debit (-1%)

Placed on 06/11/2012
Bull Put Spread SPY Exp: 06/16/2012
Sell Put $125, Buy Put $124, Limit Order with Credit $0.03 (3%)
50% Filled

Week Ending 06/08/2012 - 2%
Placed on 06/07/2012
Bull Put Spread IWM Exp: 06/08/2012
Sell Put $74, Buy Put $73, Limit Order with Credit $0.02 (2%)
50% Filled

If you want to know further track record, Sign up for Free Trade Alerts now and ask us for history.

Disclaimer: Trading involves Risk. Risk of loss in financial instruments like Options, Future and Forex can be substantial and these instruments are not suitable for everyone. Members are encouraged to consider their own financial situation and all the risk factors involved before getting into trading. Past results of our trade alerts, system or any individual trader are not indicative of future returns which may be realized by our members. Please visit Characteristics & Risks of Standardized Options to understand the risk factors.

Whenever an IPO is issued, whilst many people tend to see it to be a great opportunity to invest, others ignore it, perhaps because they really do not know what it is all about. So, what really is an IPO? Well, IPO is an acronym for Initial Public Offering' and it refers to the initial sale of a company's stock to the public. The process of how to buy stock at IPO is quite different to the many other purchases that we usually make, and it is one of the reasons many people opt not to participate in this investment that could turn out to be quite profitable.

The first thing that you would need to do is to have a trading account. The trading account is usually required for you to purchase any kind of stock, and when it comes to the IPO, careful attention would need to be paid to the firm of brokerage that you choose to sign up with. Ensure that as you sign up for this trading account, ask lots of questions about the IPOs and how the firm would help you to be able to get the best out of your trading experience. You can , make sure you check with them about a particular upcoming IPO you are interested in. They have an excellent customer service reputation and trades are very reasonable at $4.95.

It is common for people to rush into IPOs just because everyone else is doing it, but it would be quite important to do research on individual IPOs before you invest in them. The internet is a great resource that you could turn to, as there are lots of websites available that offer information on various upcoming IPOs. This would allow you to be able to plan well, for instance, setting aside funds that you might want to use in the IPO. The information you get would also help in determining whether it would really be the right decision to invest in a given IPO.

The next thing that you would need to do is to get in touch with the 'right' people. This is with regard to connections, because when it comes to IPOs, people rarely get the number of stock that they applied for due to the great number of applicants. Brokers are known to sell the IPOs to those that they consider to be top clients, and hence, getting in touch with the underwriters, would be a good way to ensure that you do indeed get a favorable percentage of the stock. For a high profile IPO like Facebook, it is almost impossible for an average investor to get the stock at IPO.

The last thing that you would be left to do is just simply buy the stock, and this should be preferably done after following the above steps. Before you do this, there are given criteria that you would have to meet before you are allowed to buy the stock. This might at times vary from one brokerage firm to another, so ensure that you do get to be eligible to buy stock well in advance of the deadline for the purchase of the shares. Once you are in possession of the shares, continue to look for information that would help you be wiser as you aim to make this venture be profitable.

This is one of the most common available personal investment option to people. You can trade stocks online for any public companies in the United States. There are many online systems (called online brokers) you can use. The online brokers charge fees (called commissions) for each trade you make. These fees range from $5 to $30. We recommend using which only charges $4.95 for each trade and provide many useful features and an easy to understand interface.

Check out the Video tour below on Pacing a Stock Order.

Once you have the account with an online broker, you need to know what stocks you want to buy and then when to sell them. There are several services available which will help you make these decisions. We recommend Zack’s premium research, enroll for free trial and get the stock picking tips.

Zacks Investment Research: Free Trial. Buy the BEST stocks, Sell the Worst Stocks, Stock Screens and more!

We also recommend one more useful service provided by the Fast Money fame Jim Cramer. Also sign up for the free trial with his action alert plus service and get his tips.

Sign up for a free trial of Jim Cramer's Action Alerts PLUS!

You are all set with trading stocks, be sure to follow the market regularly and prepare your strategy.

A bear call spread is a type of vertical spread. It contains two calls with the same expiration but different strikes. The strike price of the short call is below the strike of the long call, which means this strategy will always generate a net cash inflow (net credit) at the outset.

The short call's main purpose is to generate income, whereas the long call simply helps limit the risk from possible assignment.

The profitability of the strategy depends on how much of the initial premium revenue is retained before the strategy is closed out or expires. As the strategy's name suggests, it does best if the stock stays below the lower strike price for the duration of the options.

Still, an unexpected rally should not provoke a crisis: though the maximum gain of this strategy is very limited, so are potential losses.

Outlook

Looking for a steady or declining stock price during the life of the options. As with any limited-time strategy, the investor's long-term forecast for the underlying stock isn't as important, but this is probably not a suitable choice for those who have a bullish outlook past the immediate future. It would require an accurately timed forecast to pinpoint the turning point where a coming short-term dips will turn around and a long term rally will start.

Summary

A bear call spread is a limited-risk-limited-reward strategy, consisting of one short call option and one long call option. This strategy generally profits if the stock price holds steady or declines.

The most it can generate is the net premium received at the outset. If the forecast is wrong and the stock rallies instead, the losses grow only until long call caps the amount.

Motivation

The chance to earn income with limited risk, and/or to profit from a decline in the underlying stock's price.

Max Loss

The maximum loss is limited. The worst that can happen at expiration is for the stock price to be above the higher strike. In that case, the investor will be assigned on the short call, now deep-in-the-money, and will exercise the long call. The simultaneous exercise and assignment will mean selling the stock at the lower strike and buying the stock at the higher strike. The maximum loss is the difference between the two strikes, but it is reduced by the net credit received at the outset.

Max Gain

The maximum gain is limited. The best that can happen at expiration is for the stock to be below both strike prices. In that case, both the short and long call options expire worthless, and the investor pockets the credit received when putting on the position.

Profit/Loss

Both the potential profit and loss for this strategy are very limited and very well-defined. The initial net credit is the most the investor can hope to make with the strategy. Profits at expiration start to erode if the stock is above the lower strike price, and losses reach their maximum if the stock hits the higher strike price. Above the higher strike price, profits from exercising the long call completely offset further losses on the short call.

The way in which the investor selects the two strike prices determines the maximum income potential and maximum risk. By selecting a lower short call strike and/or a higher long call strike, the investor can increase the initial net premium income.

Breakeven

This strategy breaks even at expiration if the stock price is above the lower strike by the amount of the initial credit received. In that case the long call would expire worthless, and the short call's intrinsic value would equal the net credit.

Breakeven = short call strike + net credit received

Volatility

Slight, all other things being equal. Since the strategy involves being short one call and long another with the same expiration, the effects of volatility shifts on the two contracts may offset each other to a large degree.

Note, however, that the stock price can move in such a way that a volatility change would affect one price more than the other.

It is possible that the user may assign different volatilities to each of the strikes if they choose to solve for them.

Time Decay

The passage of time helps the position, though not quite as much as it does a plain short call position. Since the strategy involves being short one call and long another with the same expiration, the effects of time decay on the two contracts may offset each other to a large degree.

Regardless of the theoretical impact of time erosion on the two contracts, it makes sense to think the passage of time would be a positive. This strategy generates net up-front premium income, which represents the most the investor can make on the strategy. If there are to be any claims against it, they must be occur by expiration. As expiration nears, so does the date after which the investor is free of those obligations.

Assignment Risk

Yes. Early assignment, while possible at any time, generally occurs only when the stock goes ex-dividend. Be warned, however, that using the long call to cover the short call assignment will require establishing a short stock position for one business day, due to the delay in receiving assignment notification.

And be aware, any situation where a stock is involved in a restructuring or capitalization event, such as for example a merger, takeover, spin-off or special dividend, could completely upset typical expectations regarding early exercise of options on the stock.

Expiration Risk

Yes. The investor cannot know for sure whether or not they were assigned on the short call until the Monday after expiration. That creates risk. The problem is most acute if the stock was is trading just below, at, or just above the short call strike.

Say, the short call ends up slightly in-the-money, and the investor buys the stock in the market in anticipation of being assigned. If assignment fails to occur, the investor won't discover the unintended net long stock position until the following Monday, and is subject to an adverse move in the stock over the weekend.

There is risk guessing wrong in the other direction, too. This time, assume the investor bets against being assigned. Come Monday, if assignment occurred after all, the investor is unexpectedly short the stock, and its value may have risen in value over the weekend.

Two ways to prepare: close the spread out early, or be prepared for either outcome on Monday. Either way, it's important to monitor the stock, especially over the last day of trading.

Read full detail and check out the Position Simulator at OptionsEducation.org

A bull put spread involves being short a put option and long another put option for same expiration but with a lower strike. The short put generates income, whereas the long put's main purpose is to offset assignment risk. Because of the relationship between the two strike prices, the investor will always be paid a premium (credit) when initiating this position.

This strategy entails precisely limited risk and reward potential. The most this spread can earn is the net premium received at the outset, which is likeliest if the stock price stays steady or rises.

If the forecast is wrong and the stock declines instead, the strategy leaves the investor with either a lower profit or a loss. The maximum loss is capped by the long put.

Outlook

Looking for a steady or rising stock price during the term of the of options.

While the longer-term outlook is secondary, there is an argument for considering another alternative if the investor is bearish on the stock's future. It would take careful pinpointing to forecast when an expected rally would end and the eventual decline would start.

Summary

A bull put spread is a limited-risk-limited-reward strategy, consisting of a short put option and a long put option with a lower strike. This spread generally profits if the stock price holds steady or rises.

Motivation

Investors do this spread either as a way to earn income with limited risk, or to profit from a rise in the underlying stock's price, or both.

Max Loss

The maximum loss is limited. The worst that can happen is for the stock price to be below the lower strike at expiration. In that case, the investor will be assigned on the short put, now deep-in-the-money, and will exercise the long put. The simultaneous exercise and assignment will mean buying the stock at the higher strike and selling it at the lower strike. The maximum loss is the difference between the strikes, less the credit received when putting on the position.

Max Gain

The maximum gain is limited. The best that can happen is for the stock to be above the higher strike price at expiration. In that case both put options expire worthless, and the investor pockets the credit received when putting on the position.

Profit/Loss

Both the potential profit and loss for this strategy are very limited and very well-defined. The initial net credit is the most the investor can hope to make with the strategy. Profits at expiration start to erode if the stock is below the higher (short put) strike, and losses reach their maximum if the stock falls to, or beyond, the lower (long put) strike. Below the lower strike price, profits from exercising the long put completely offset further losses on the short put.

The way in which the investor selects the two strike prices determines the maximum income potential and maximum risk. By selecting a higher short put strike and/or a lower long put strike, the investor can increase the initial net premium income.

Breakeven

This strategy breaks even if, at expiration, the stock price is below the upper strike (short put strike) by the amount of the initial credit received. In that case the long put would expire worthless, and the short put's intrinsic value would equal the net credit.

Breakeven = short put strike - net credit received

Volatility

Slight, all other things being equal. Since the strategy involves being short one put and long another with the same expiration, the effects of volatility shifts on the two contracts may offset each other to a large degree.

Note, however, that the stock price can move in such a way that a volatility change would affect one price more than the other.

It is possible that the user may assign different volatilities to each of the strikes if they choose to solve for them.

Time Decay

The passage of time helps the position, though not quite as much as it does a plain short put position. Since the strategy involves being short one put and long another with the same expiration, the effects of time decay on the two contracts may offset each other to a large degree.

Regardless of the theoretical impact of time erosion on the two contracts, it makes sense to think the passage of time would be a positive. This strategy generates net up-front premium income, which represents the most the investor can make on the strategy. If there are to be any claims against it, they must be occur by expiration. As expiration nears, so does the date after which the investor is free of those obligations.

Assignment Risk

Yes. Early assignment, while possible at any time, generally occurs only when a put option goes deep into-the-money. Be warned, however, that using the long put to cover the short put assignment will require financing a long stock position for one business day.

And be aware, any situation where a stock is involved in a restructuring or capitalization event, such as for example a merger, takeover, spin-off or special dividend, could completely upset typical expectations regarding early exercise of options on the stock.

Expiration Risk

Yes. If held into expiration this strategy entails added risk. The investor cannot know for sure whether or not they will be assigned on the short put until the Monday after expiration. The problem is most acute if the stock is trading just below, at, or just above the short put strike.

Say, the short put ends up slightly in-the-money, and the investor sells the stock short in anticipation of being assigned. If assignment fails to occur, the investor won't discover the unintended net short stock position until the following Monday, and is subject to an adverse rise in the stock over the weekend.

There is risk guessing wrong in the other direction, too. This time, assume the investor bets against being assigned. Come Monday, if assignment occurs after all, the investor has a net long position in a stock that may have lost value over the weekend.

Two ways to prepare: close the spread out early, or be prepared for either outcome on Monday. Either way, it's important to monitor the stock, especially over the last day of trading.

Read full detail and check out the Position Simulator at OptionsEducation.org

Do you ever wonder how the Options work and does it all sound greek to you when other people are talking about Calls and Puts? First of all, Options are very risky investment and are not suitable for everyone. Options could lose significant value in a very short period of time. Now for everything, you have to learn and begin somewhere. But it is good to understand that Options are high risk - high return type of investment.

When you buy Options, it gives you right to buy/sell the underlying stocks. When you sell options, you have obligation to buy/sell the underlying stocks. There are two types of options, Calls and Puts. Call Options give you right to buy underlying stocks when you buy it. For seller, it creates an obligation to sell the underlying stocks if the buyer wants to exercise his right. When you buy Put Options, it gives you right to sell the underlying stocks and similarly the seller has obligation to buy the underlying stocks if the buyer wants to exercise his right.

Now above definitions are confusing enough for someone trying to understand the basics. So let's dive into the detail. Why would someone want to buy Call Options or Put Options? Options are the most innovative investment instrument ever invented. If you look at the stock prices today, there are majority of good stocks which a normal individual investor can't reasonably afford. The Options allow the investor chance to invest in these stocks at lower prices and many times at fraction of what the stock price is. So if you think a particular stock is currently trading at an attractive price and it would go higher in future, you can explore the possibility of buying Call Options for that stock. Similarly, if you think a particular stock is trading at higher price and it would go lower in future, buying the Put Options for that stock should be explored. The cost of the Options is called Premium. So the next question arises, why would someone want to sell the Call Options or Put Options? Short answer, to earn the premium. If you hold some stocks and you think the stock prices for the defined timeframe would remain same, you can explore the possibility of selling the Call Options for little higher price than the current price and collect the premium. This would be called Covered Call since you already own the stocks and would be able to sell it if the buyer later wants to exercise his right to buy the stocks. If you didn't own the stock while selling the Call Options, it would be called Naked Call, this would be the riskiest of Options. Now if you want to buy some stocks at lower price than it is currently trading but don't think it would go down that much in defined timeframe. you can explore the possibility of selling the Put Options at the lower Price and collect the premium. If the stock eventually goes down to that price within that timeframe, you would simply buy the stocks. These are the simplest definitions and explanation.

Let's take some examples to make this clear and understand some more terms associated with Options. Let's consider Microsoft (MSFT) stock which currently traded at $27.12 on September 16th, 2011 at the close. Now we'll cover some hypothetical examples. You should do proper research and analysis before deciding a stock price would go higher or lower. Let's consider that you are bullish and think the price would go significantly higher by January 2012. You could look at the Calls prices and can purchase $29 Call for about $0.87 per share. One contract option include 100 shares so it would cost you $87. Here the $29 would be called Strike Price and $0.87 is Premium. January 2012 Contract expires on January 21, 2012. The premium for any Options get determined from four main factors; Current Stock Price, Strike Price, Days to Expiration and Implied Volatility. The Options which expire further out would be more expensive because of the time value associated. Also, the stocks with higher implied volatility would cost more. Now for the example we are talking, before January 21, 2012, if and when the Microsoft stock trades above $29.00, the Option would be called 'In the Money'. If you are bearish about Microsoft stock and think that it would go significantly lower by January 2012, you could consider buying the Put Options of MSFT and can purchase $24 Put for about $0.85 per share. If by January 21, 2012, the Microsoft stock trades below $24, the Option would be 'In the Money'.

I would recommend setting an exit strategy on Options trades as the value changes very rapidly and you could either lose a lot of money or could miss on the profits.

Disclosure: I have no positions in any stocks mentioned, and do not intend to initiate any position within the next 72 hours.

Earlier today, US Government sued and filed an Antitrust complaint to block the AT&T takeover deal of T-Mobile. There are four major wireless carriers currently in US. Verizon (VZ) enjoying the top spot, AT&T (T) the second largest followed by Sprint Nextel (S) at third and T-Mobile (DTE) at fourth spot.

“AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market,” the U.S. said in its filing. The merger would make AT&T no. 1 US Carrier ahead of Verizon. Now there are some cancellation fees associated if the deal doesn't go through. AT&T would have to pay Deutsche Telekom (DTE) $3 billion in cash. It would also need to provide T-Mobile with wireless spectrum in some regions and reduced charges for calls into AT&T’s network, making a total package valued at as much as $7 billion, according to Deutsche Telekom earlier this month.

No wonder AT&T shares are falling more than 4%, down to 28.28 (-4.52%) as of this writing. The associated cancellation fees give AT&T the incentive to fight the suit and make their case in favor of the deal. The FCC has not made any decision in favor or against the deal. This whole scenario makes the situation a big mess.

The bright side is AT&T's current dividend yield of more than 6%. In the worst case scenario, AT&T still remains a no. 2 Carrier, needs to pay up to $7 Billions in charges for cancellation. AT&T still needs to improve their coverage but in GSM technology based network they are still going to be the leader. There is going to be a new iPhone coming soon, definitely for AT&T network.

I would recommend that the half-and-half strategy be applied to AT&T (T). The half-and-half balances the potential reward of buying stocks with the risk of buying while the stock trend is uncertain. If you want to own 200 shares of a stock, buy 100 shares and sell one put. If the stock is put to you, you'll buy more shares, but at a lower price. As a bonus, you will have earned the premium on the put sale. The risk would be if the stock races higher and you miss the gains from the additional shares not bought. But then you would have gains in the stock you already bought.

The investor would buy 100 shares of AT&T (T) at $28.00 and sell one January $26.00 put for $1.30ish. If the stock is put to that investor because it falls below $26, the investor will buy an additional 100 shares at $24.70. This effectively lowers the average price of the 200 shares to $26.35 each.