Welcome to the second installment on how to learn to trade stock options successfully. In this article I will cover the next key, namely obtaining and using good information.
Most people have heard the expression “garbage in, garbage out”. Well that phrase applies to options trading as well. You will only successfully trade options if you have good market and stock information. Luckily one of the great benefits of trading stock options is the fact that good information is not only easy to find it is also mostly free. The internet is an extremely powerful tool and most people these days have a fast internet connection that is easily accessible. The trouble is interpreting and discerning the useful information.
I have compiled a list of sites that I visit daily along with an explanation of just some of the information you can find on them.
www.finance.yahoo.com
Yahoo! Finance is a great source for all financial news. Each morning, before the market opens, I check the In Play® report. This report tells you all of the financial and company news that has occurred during the night and before the market opens. It is a great way to find out if there will be any unexpected market moves, or perhaps big moves in individual stocks that you can capitalize on. The report is continually updated throughout the day as is the Market Overview which gives a running commentary on the performance of the major indices.
When you enter the name of a stock or ticker symbol, Yahoo! Finance has an excellent company overview, with current news and charts, a full profile, key statistics, financial reports and analyst coverage.
Additionally there is a splits calendar that details the stock splits that are currently announced and an economic calendar that not only details upcoming economic announcements but ranks them according to their importance or impact they have on the stock market.
www.msnmoney.com
Again, this website is a good source for all investment news. In particular MSN has a great earnings page that details earnings estimates, past performance, trends and growth rates. It also has a very easy to use Research Wizard that explains and identifies fundamental analysis of individual companies. The MSN StockScouter report rates individual stocks according to a proprietary method of analyzing a stock’s potential risk and return.
www.rttnews.com
This website has financial news from around the globe. I particularly like the breaking news feature that can be downloaded and placed on your desktop. A desk alert then pops up with any breaking news as it happens. It can also be customized so that only the information you want gets through.
www.tradingday.com
This is a very rudimentary website that has excellent links to such information as stock gainers and losers, most actively traded stocks, market statistics, after hours trades and analyst and broker rankings. All of which is very useful information when trading short term.
www.prophet.net
Like most sites this has a paid membership service but there is a lot of great information if you sign up for a free basic membership. I especially pay attention to the industry rankings, this is a good indication of where institutional investors are putting their money and as they have millions, if not billions, to invest it is often a good indication of what sectors will either be increasing or decreasing in value. The historical trends show the change in ranking over a certain time period, another good indication of which way money is flowing. For the more technically minded they have a very complete “Prophet Signals” and “Prophet Scan” system for analyzing stocks.
As I mentioned in the beginning of this article good information is key to good trading, remember though, you must learn how to use this information correctly in order for it to benefit you. Spend some time familiarizing yourself with these websites, make sure you know what all of the terms mean and how to use the indicators and if you find any other good websites out there please let me know! If I may paraphrase Benjamin Franklin I will finish by saying “The best return anyone ever gets on their money is when they invest in knowledge.” Stay tuned for Key #3 coming soon.
US Government required disclaimer: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of the Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker, from any exchange on which options are traded or by contacting The Options Clearing Corporation, One North Wacker Dr., Suite 500 Chicago, IL 60606 (1-800-678-4667).
Roger Cox, born in New Zealand, was President of a large international freight company in Los Angeles before starting his own consulting firm. Roger has been successfully trading stock options for 4 years and teaches others how to do the same at http://www.prosperitywithoptions.com